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The 
NORTH CAROLINA 



REGISTER 



IN THIS ISSUE 



FINAL DECISION LETTERS 




PROPOSED RULES 

Agriculture 

Electrolysis Examiners, Board of 

Environment, Health, and Natural Resources 

Human Resources 

State Treasurer 

FINAL RULES 

Revenue 
Transportation 

ARRC OBJECTIONS 

RULES INVALIDATED BY JUDICIAL DECISION 

ISSUE DATE: SEPTEMBER 16, 1991 
Volume 6 • Issue 12 • Pages 722-783 



INFORMATION ABOUT THE NORTH CAROLINA REGISTER AND ADMINISTRATIVE CODE 



NORTH CAROLINA REGISTER 

The North Carolina Register is published bi-monthly 
and contains information relating to agency, executive, 
legislative and judicial actions required by or affecting 
Chapter 150B of the General Statutes. All proposed, ad- 
ministrative rules and amendments filed under Chapter 
150B must be published in the Register. The Register 
will typically comprise approximately fifty pages per 
issue of legal text. 

State law requires that a copy of each issue be pro- 
vided free of charge to each county in the state and to 
various state officials and institutions. The North Carolina 
Register is available by yearly subscription at a cost of 
one hundred and five dollars ($105.00) for 24 issues. 

Requests for subscriptions to the North Carolina 
Register should be directed to the Office of Ad- 
ministrative Hearings, P. O. Drawer 27447, Raleigh, N. 
C. 27611-7447, Attn: Subscriptions. 

ADOPTION, AMENDMENT, AND REPEAL OF 
RULES 

An agency intending to adopt, amend, or repeal a rule 
must first publish notice of the proposed action in the 
North Carolina Register. The notice must include the 
time and place of the public hearing; a statement of how 
public comments may be submitted to the agency either 
at the hearing or otherwise; the text of the proposed 
rule or amendment; a reference to the Statutory 
Authority for the action and the proposed effective date. 

The Director of the Office of Administrative Hearings 
has authority to publish a summary, rather than the 
full text, of any amendment which is considered to be 
too lengthy. In such case, the full text of the rule con- 
taining the proposed amendment will be available for 
public inspection at the Rules Division of the Office of 
Administrative Hearings and at the office of the pro- 
mulgating agency. 

Unless a specific statute provides otherwise, at least 
30 days must elapse following publication of the pro- 
posal in the North Carolina Register before the agency 
may conduct the required public hearing and take ac- 
tion on the proposed adoption, amendment or repeal. 

When final action is taken, the promulgating agency 
must file any adopted or amended rule for approval by 
the Administrative Rules Review Commission. Upon ap- 
proval of ARRC, the adopted or amended rule must be 
filed with the Office of Administrative Hearings. If it 
differs substantially from the proposed form published 
as part of the public notice, upon request by the agen- 
cy, the adopted version will again be published in the 
North Carolina Register. 

A rule, or amended rule cannot become effective 
earlier than the first day of the second calendar month 
after the adoption is filed with the Office of Ad- 
ministrative Hearings for publication in the NCAC. 

Proposed action on rules may be withdrawn by the 
promulgating agency at any time before final action is 
taken by the agency. 

TEMPORARY RULES 

Under certain conditions of an emergency nature, 
some agencies may issue temporary rules. A temporary 
rule becomes effective when adopted and remains in 



effect for the period specified in the rule or 180 days, 
whichever is less. An agency adopting a temporary rule 
must begin normal rule-making procedures on the per- 
manent rule at the same time the temporary rule is 
adopted. 

NORTH CAROLINA ADMINISTRATIVE CODE 

The North Carolina Administrative Code (NCAC) is 
a compilation and index of the administrative rules of 
25 state agencies and 38 occupational licensing boards. 
The NCAC comprises approximately 15,000 letter size, 
single spaced pages of material of which approximate- 
lv 35% is changed annually. Compilation and publica- 
tion of the NCAC is mandated by G.S. 150B-63(b). 

The Code is divided into Titles and Chapters. Each 
state agency is assigned a separate title which is fur- 
ther broken down by chapters. Title 21 is designated 
for occupational licensing boards. 

The NCAC is available in two formats. 

(1) Single pages may be obtained at a minimum 
cost of two dollars and 50 cents ($2.50) for 10 
pages or less, plus fifteen cents ($0.15) per each 
additional page. 

(2) The full publication consists of 53 volumes 
totaling in excess of 15,000 pages. It is sup 
plemented monthly with replacement pages. A 
one year subscription to the full publication in 
eluding supplements can be purchased foi 
seven hundred and fifty dollars ($750.00). In 
dividual volumes may also be purchased wit! 
supplement service. Renewal subscriptions foi 
supplements to the initial publication available 

Requests for pages of rules or volumes of the NCAC 
should be directed to the Office of Administrate 
Hearings. 

NOTE 

The foregoing is a generalized statement of the pro 
cedures to be followed. For specific statutory language 
it is suggested that Articles 2 and 5 of Chapter 150B o 
the General Statutes be examined carefully. 

CITATION TO THE NORTH CAROLINA 
REGISTER 

The North Carolina Register is cited bv volume, issus 
page number and date. 1:1 NCR 101-201, April 1, 198 

refers to Volume 1, Issue 1, pages 101 through 201 o 
the North Carolina Register issued on April 1, 1986 



North Carolina Register. Published bi-monthly by the 
Office of Administrative Hearings, P.O. Drawer 27447, 
Raleigh, North Carolina 27611-7447, pursuant to 
Chapter 150B of the General Statutes. Subscriptions 
one hundred and five dollars ($105.00) per year. 

North Carolina Administrative Code. Published in 
looseleaf notebooks with supplement service by the 
Office of Administrative Hearings, P.O. Drawer 27447, 
Raleigh, North Carolina 27611-7447, pursuant to 
Chapter 150B of the General Satutes. Subscriptions 
seven hundred and fifty dollars ($750.00). Individual 
volumes available. 



NORTH 
CAROLINA 
REGISTER 



ISSUE CONTENTS 




Office of Administrative Hearings 

P. O. Drawer 27447 

Raleigh. NC 27611-7447 

(919) 733- 2678 



I. FINAL DECISION LETTERS 

Voting Rights Act 722 



II. PROPOSED RULES 

Agriculture 

Food and Drug 

Protection Division 725 

Environment, Health, and 

Natural Resources 

Health Services 727 

State Registrar 734 

Human Resources 

Medical Assistance 726 

Licensing Board 

Electrolysis Examiners, 

Board of 737 

State Treasurer 

Retirement Systems 736 



Julian Mann III, 

Director 
James R. Scarcella Sr., 

Deputy Director 
Molly Masich, 

Director APA Services 



Staff: 

Ruby Creech, 

Publications Coordinator 
Teresa Kilpatrick, 

Editorial Assistant 
Jean Shirley, 

Editorial Assistant 



III. FINAL RULES 
Revenue 

Individual Income, Inheritance 

and Gift Tax Division 739 

Individual Income Tax 747 

Intangibles Tax 766 

License and Excise Tax 740 

Motor Fuels Tax 768 

Transportation 
Motor Vehicles 773 

IV. ARRC OBJECTIONS 776 

V. RULES LNVALIDATED BY 

JUDICIAL DECISION 779 

VI. CUMULATIVE INDEX 781 



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in 2011 with funding from 

University of North Carolina at Chapel Hill 



http://www.archive.org/details/northcarolinareg612nort 



VOTING RIGHTS ACT FINAL DECISION LETTERS 



[G.S. 120-30.9H, effective July 16, 1986, requires that all letters and other documents issued by the 
A ttorney General of the United States in which a final decision is made concerning a "change af- 
fecting voting" under Section 5 of the Voting Rights Act of 1965 be published in the North Carolina 
Register. / 



U.S. Department of Justice 
Civil Rights Division 

JRD:SSC:TGL:gmh 

DJ 166-012-3 Voting Section 

91-1952 P.O. Box 66128 

Washington, D.C. 20035-6128 

August 15, 1991 

DeWitt F. McCarley, Esq. 

City Attorney 

P. O. Box 7207 

Greenville, North Carolina 27835-7207 

Dear Mr. McCarley: 

This refers to the delay in the municipal election schedule from November 1991 to May 1992 for 
the City of Greenville in Pitt County, North Carolina, submitted to the Attorney General pursuant to 
Section 5 of the Voting Rights Act of 1965, as amended, 42 U.S.C. 1973c. We received your sub- 
mission on June 19, 1991. 

The Attorney General does not interpose any objection to the specified change. However, we note 
that Section 5 expressly provides that the failure of the Attorney General to object does not bar sub- 
sequent litigation to enjoin the enforcement of the change. See the Procedures for the Administration 
of Section 5 (28 C.F.R. 51.41). 

Sincerely, 

John R. Dunne 

Assistant Attorney General 

Civil Rights Division 



By: 



Gerald W. Jones 
Chief, Voting Section 



6:12 NORTH CAROLINA REGISTER September 16, 1991 722 



VOTING RIGHTS ACT FINAL DECISION LETTERS 



U.S. Department of Justice 
Civil Rights Division 

JRD:RBJ:NT:tlb 

DJ 166-012-3 Voting Section 

91-1978 P.O. Box 66128 

Washington, D.C. 20035-6128 



August 19, 1991 



George Weaver, Esq. 

Lee, Reece & Weaver 

P. O. Box 2047 

Wilson, North Carolina 27894-2047 



Dear Mr. Weaver: 



This refers to the election day voter transfer procedures in Wilson County, North Carolina, sub- 
mitted to the Attorney General pursuant to Section 5 of the Voting Rights Act of 1965, as amended, 
42 L.S.C. 1973c. We received your submission on June 20, 1991. 

The Attorney General does not interpose any objection to the specified change. However, we note 
that Section 5 expressly provides that the failure of the Attorney General to object does not bar sub- 
sequent litigation to enjoin the enforcement of the change. See the Procedures for the Administration 
of Section 5 (28 C.F.R. 51.41). 



Sincerely, 



John R. Dunne 

Assistant Attorney General 

Civil Rights Division 



By: 



Gerald W. Jones 
Chief, Voting Section 



'25 6:12 NORTH CAROLINA REGISTER September 16, 1991 



VOTING RIGHTS ACT FINAL DECISION LETTERS 



U.S. Department of Justice 
Civil Rights Division 

JRD:MAP:JRN:tlb 

DJ 166-012-3 Voting Section 

91-2085 P.O. Box 66128 

90-3761 Washington, D.C. 20035-6128 

August 22, 1991 

Michael Crowell, Esq. 
Tharrington, Smith & Hargrove 
P.O. Box 1151 
Raleigh, North Carolina 27602 

Dear Mr. Crowell: 

This refers to Chapter 374 (1991), which provides for a change in method of election from at large 
to two double-member districts and one at-large position, the districting plan, and the implementation 
schedule for the Town of Williamston in Martin County, North Carolina, submitted to the Attorney 
General pursuant to Section 5 of the Voting Rights Act of 1965, as amended, 42 U.S.C. 1973c. We 
received your submission on June 26, 1991. 

This also refers to the Town of Williamston's submission under Section 5 of Chapter 883 (1990), 
which provided for a change in method of election from at-large to three single-member districts and 
two at-large positions elected by limited voting, and the districting plan. We received your request to 
withdrew this submission on June 26, 1991. 

With respect to the changes occasioned by Chapter 374 (1991), the Attorney General does not 
interpose any objection to the specified changes. However, we note that Section 5 expressly provides 
that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the 
enforcement of the changes. See the Procedures for the Administration of Section 5 (28 C.F.R. 51.41). 

With respect to the changes occasioned by Chapter 883 (1990), your June 25, 1991 letter withdraws 
your submission from Section 5 review. Accordingly, no determination by the Attorney General is 
required concerning this matter. See [28 C.F.R. 51.25(a)]. 

Sincerely, 



John R. Dunne 

Assistant Attorney General 
Civil Rights Division 



By: 



Gerald W. Jones 
Chief, Voting Section 



6:12 NORTH CAROLINA REGISTER September 16, 1991 724 



PROPOSED RULES 



TITLE 2 - DEPARTMENT OF 
AGRICULTURE 



No 



otice is hereby given in accordance with G.S. 
1 SOB- 12 that the North Carolina Pesticide Board 
intends to adopt rules cited as 2 NCAC 9L .2101 

- .2107. 

1 he proposed effective date of this action is 
February I. 1992. 

1 he public hearing will be conducted at 1:00 
p.m. on November 7, 1991 at the Board Room, 



The location of the hearing in a contested case 
shall be as prescribed in G.S. 150B-38(e). 

Statutory Authority G.S. 143-437; 150B-38. 

.2104 INTERVENTION 

The intervention of persons not initially parties 
to a contested case is governed by G.S. 
150B-38(f). Petitions or motions to intervene 
must be in writing. The Board shall promptly 
determine whether to grant or deny intervention 
and shall so notify the petitioner and all parties 
in writing. 



One Edenton Street, Statutory Authority G.S. 143-437; 150B-38. 



Agriculture Building, 
Raleigh, NC 27601. 

C_^ omment Procedures: Interested persons may 
present statements either orally or in writing at the 
public hearing or in writing prior to the hearing 
by mail addressed to John L. Smith, Secretary, 
North Carolina Pesticide Board, P.O. Box 27647, 
Raleigh, NC 27611. 

CHAPTER 9 - FOOD AND DRUG PROTECTION 
DIVISION 

SUBCHAPTER 9L - PESTICIDE SECTION 

SECTION .2100 - HEARING RULES OF THE 
NORTH CAROLINA PESTICIDE BOARD 

.2101 NOTICE OF HEARING: ANSWER 

(a) The contents and manner of service of no- 
tice of hearing in a contested case shall be as 
prescribed in G.S. 150B-38(b) and (c). 

(b) Any party who has been served with notice 
of hearing may file a written response as pre- 
scribed in G.S. 150B-38(d). 

Statutory Authority G.S. 143-437; 150B-38. 

.2102 RIGHT TO HEARING 

(a) Contested Cases. Disciplinary proceedings 
to enforce the provisions of North Carolina Pes- 
ticide Law of 1971 and 2 NCAC 9L are deemed 
to be "contested cases" within the meaning of 
G.S. 150B-2, and any person subject to such 
proceedings shall be given notice and the oppor- 
tunity to be heard. 

(b) Summary Suspension. Nothing within 
Paragraph (a) of this Rule shall abridge the right 
of the Board to summarily suspend a license or 
certification prior to hearing pursuant to G.S. 
150B-3(c). 

Statutory Authority G.S. 143-437; 150B-38. 
.2103 LOCATION OF HEARING 



.2105 SUBPOENAS 

The authority of the Board to issue or revoke 
subpoenas in preparation for, or in the conduct 
of, contested cases is governed by G.S. 150B-39. 
If a subpoena is issued at the request of a party 
and not on the Board's own motion, that party 
shall bear the cost of service. 

Statutory Authority G.S. 143-437; 150B-38. 

.2106 CONDUCT OF HEARING 

(a) Hearings in contested cases shall be con- 
ducted by a majority of the Board. The chair- 
man shall serve as presiding officer unless he is 
absent or disqualified, in which case the vice- 
chairman shall preside. Hearings shall be con- 
ducted as prescribed in G.S. 150B-40. 

(b) Disqualification. An affidavit seeking dis- 
qualification of any Board member, if filed in 
good faith and in a timely manner, will be ruled 
on by the remaining members of the Board. An 
affidavit is considered timely if it is filed: 

(1) Prior to the hearing; or 

(2) As soon after the commencement of the 
hearing as the affiant becomes aware of 
facts which give rise to his belief that a 
Board member should be disqualified. 

(c) Evidence. The admission of evidence in a 
hearing in a contested case shall be as prescribed 
in G.S. 150B-41. 

Statutory Authority G.S. 143-437; 150B-38. 

.2107 DECISION OF BOARD 

(a) The form and content of the Board's deci- 
sion in a contested case shall be as prescribed by 
G.S. 150B-42(a), and its decision shall be served 
upon the parties in a manner consistent with said 
statute. 

(b) The official record of the hearing in a con- 
tested case shall contain those items specified in 
G.S. 150B-42(b). 



725 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



Statutoiy Authority G.S. 143-437; I50B-38. 

TITLE 10 - DEPARTMENT OF HUMAN 
RESOURCES 



lyotice is hereby given in accordance with G.S. 
1 SOB- 1 2 that the Department of Human 
Resources! Division of Medical Assistance intends 
to amend rule(s) cited as 10 NCAC 26B .0104; 
50B .0101 - .0102. 

1 he proposed effective date of this action is 
January 1, 1992. 

1 he public hearing will be conducted at 1:30 
p.m. on October 16, 1991 at the North Carolina 
Division of Medical Assistance, 1985 Umstead 
Drive, Room 297, Raleigh, N.C. 27603. 



Cc 



■ omment Procedures: Written comments con- 
cerning these amendments must be submitted by 
October 16, 1991 , to: Division of Medical As- 
sistance, 1985 Umstead Drive, Raleigh. N.C. 
27603, ATTN.: Bill Hottel, APA Coordinator. 
Oral comments may be presented at the hearing. 
In addition, a fiscal impact statement is available 
upon written request from the same address. 

CHAPTER 26 - MEDICAL ASSISTANCE 

SUBCHAPTER 26B - MEDICAL ASSISTANCE 
PROVIDED 

SECTION .0100 - GENERAL 

.0104 LABORATORY AND X-RAY SERVICES 

Laboratory and x-ray services shall «*et be cov- 
ered if performed i» connection with a routine 
physical examination, to the extent permitted in 
federal regulations and subject to the following 
conditions: 

( 1) The service is not performed in connection 
with a routine physical examination. 

(2) Laboratory services are rendered by pro- 



viders who: 



[a) 

<±1 



Are Medicare certified laboratory' provid- 
ers, and 
Are inspected by the N.C. Division of 
Facility Services, and 

Participate in an approved laboratory 
proficiency testing program. 
(3) Portable x-ray services are medically neces- 
sary' and ordered in writing by the attending 
physician. Services may be provided only 
by providers who are Medicare certified and 
inspected by the N.C. Division of Facility 



Services and are limited to provision in the 
patient's home or a nursing facility. The 
ordering physician must: 

(a) State the patient's diagnosis, and 

(b) Indicate the condition suspected, and 

(c) Reason why "portable" service is needed. 

Authority G.S. 108A-25(b); 108A-54; 42 C.F.R. 
440.30; 42 C.F.R. 441.16. 

CHAPTER 50 - MEDICAL ASSISTANCE 

SUBCHAPTER 50B - ELIGIBILITY 
DETERMINATION 

SECTION .0100 - COVERAGE GROUPS 

.0101 MANDATORY 

The following groups required by 42 U.S.C. 
1396a(a)(10)(A)(i) shall be eligible for Medicaid: 



Recipients receiving AFDC. 
Deemed recipients of AFDC including: 
Individuals denied AFDC solely because 
the payment amount would be less than 
ten dollars ($10.00), 

Participants in AFDC work 
supplementation programs approved in 
the AFDC State Plan, 
Individuals deemed to be AFDC recipients 
for four months following termination of 
AFDC due to collection or increased col- 
lection of child support, 
Individuals receiving transitional Medicaid 
as described in 42 U.S.C. 1396s when 
AFDC eligibility is lost due to increased 
earnings, 

Individuals for whom an adoption assist- 
ance agreement is in effect or foster care 
maintenance payments are being made 
under Title IV E of the Social Security 
Act as described at 42 U.S.C. 673 (b). 
Qualified pregnant women as defined at 
42 U.S.C. 1396d(n)(l). 

(4) Qualified children as defined at 42 U.S.C. 
1396d(n)(2). 

(5) Pregnant women, during a 60 day period 
following termination of the pregnancy, for 
pregnancy related and post partum services 
if they applied for Medicaid prior to termi- 
nation or the pregnancy and were eligible on 
the date pregnancy is terminated. 

(6) Infants, born to a woman who was eligible 
for an receiving Medicaid on the date of 
birth, for up to one year from the date of 
birth; as long as the mother remains eligible 
for Medicaid. 

(7) Aged, blind or disabled individuals who 
meet financial eligibility criteria more re- 
strictive than those of the SSI program. 



(1) 
(2) 
(a) 



(b) 



(c) 



(d) 



(e) 



(3) 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



726 



PROPOSED RULES 



(8) Individuals who meet the requirements 
under 42 U.S.C. 1382h(a) or (b)(1). 

(9) Blind or disabled individuals who were el- 
igible in December 1973 as blind or disabled 
and who for each consecutive month since 
December 1973 continue to meet December 
1973 eligibility criteria. 

(10) Individuals who were eligible in December 
1973 as aged, or blind, or disabled with an 
essential spouse and who, for each consec- 
utive month since December 1973, continue 
to live with the essential spouse and meet 
December 1973 eligibility criteria. 

(11) Individuals who in December 1973 were 
eligible as the essential spouse of an aged, 
or blind, or disabled individual and who for 
each consecutive month since December 
1973, have continued to live with that indi- 
vidual who has met December 1973 eligibil- 
ity criteria. 

(12) Qualified Medicare Beneficiaries described 
at 42 U.S.C. 1396d(p). 

(13) Pregnant women whose countable income 
does not exceed the percent of the income 
official poverty line, established at 42 U.S.C. 
1396a(l)(2), for pregnancy related sendees 
including labor and delivery. 

(14) Children born after September 30, 1983 
and who are under age s*s whoso countable 
incom e duos set- exceed Ae p e rc e nt ef the 
incomo official povortv feer established 19 
who are described at 43 U.S.C. 13%a(l)(2). 
42 U.S.C. 13%a(l). 



Authority G.S. 108A-54; 150B-I4(c); 42 U.S.C. 
1396a(aj(10)(A)(i); 42 U.S.C. 1396a(f); 42 
C.F.R. 435.110; 42 C.F.R. 435.112; 42 C.F.R. 
435.113; 42 C.F.R. 435.114; 42 C.F.R. 435.115; 
42 C.F.R. 435.116; 42 C.F.R. 435.117; 42 C.F.R. 
435.118; 42 C.F.R. 435.121; 42 C.F.R. 435.131; 
42 C.F.R. 435.132; 42 C.F.R. 435.133. 

.0102 OPTIONAL 

The following optional groups of individuals 
described by 42 U.S.C. 1396a(a)(10)(A)(ii) and 
42 U.S.C. 1396a(a)(10)(C) shall be eligible for 
Medicaid: 
(1) Children: 
(a} Children under the age limit established 
by the General Assembly whoso family 
income i* equal t» w le* than the percent 
ef the federal poverty level, established by 
the General Assembly: 
(a) (4>) Children under age one whose family 
income is more than the amount estab- 
lished under Paragraph (14), Rule .0101 
of this Section and not more than a per- 



cent of the federal poverty level estab- 
lished by the General Assembly; 
(b) (e) Children under age 21 who meet the 
eligibility requirements of this Subchapter. 

(2) Individuals receiving optional state supple- 
mental payment. 

(3) Caretaker relatives of eligible dependent 
children. 

(4) Pregnant women: 

(a) Whose countable income is more than the 
amount established under Paragraph (13), 
Rule .0101 of this Section and not more 
than a percent of the federal poverty level 
established by the General Assembly, or 

(b) Who, if their countable income exceeds 
the percent of the federal poverty level, 
established in Subparagraph (4)(a) of this 
Rule, meet the eligibility criteria for med- 
ically needy set forth in this Subchapter. 

Authority G.S. 108A-54: 42 U.S.C. 1396 (a) 
(10) (A) (ii); 42 U.S.C. 1396a (a) (10) (C); 
42 C.F.R. 435.210; 42 C.F.R. 435.222; 42 C.F.R. 
435.230; 42 C.F.R. 435.301; 42 C.F.R. 435.308; 
42 C.F.R. 435.322; 42 C.F.R. 435.330; S.L. 1983, 
c. 1034, s. 62.2; S.L. 1987, c. 738. s. 69 and 70; 
S.L. 1989. c. 752, s. 133. 

TITLE 15A - DEPARTMENT OF 

ENVIRONMENT, HEALTH, AND 

NATURAL RESOURCES 

iVotiee is hereby given in accordance with G.S. 
1 SOB- 12 that the Commission for Health Services, 
Department of Environment, Health, and Natural 
Resources intends to amend rule(s) cited as 15A 
NCAC ISA .1945; 18C .1534; and adopt rule(s) 
cited as 15A NCAC 18C .2101 - .2104. 

1 he proposed effective date of this action is 
February 1, 1992. 

1 he public hearing will be conducted at the fol- 
lowing Dates, Times, and Locations: 

October 16, 1991 

1:30 p.m. 
Ground Floor Hearing Room 

Archdale Building 

512 North Salisbury Street 

Raleigh, N.C. 

October 21, 1991 

7:30 p.m. 

Willis Building Auditorium 

Eastern North Carolina Regional Development 

Institute 



727 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



Corner of First and Reade Street 
Greenville, N.C. 

October 24, 1991 

7:30 p.m. 

Auditorium 

Forsyth-Stokes Mental Health Center 

725 Highland A venue 

Winston-Salem, N.C. 

(comment Procedures: All persons interested in 
these matters are invited to attend the public 
hearing. Written comments may be presented at 
the public hearing or submitted to John P. 
Barkley, DEHNR, P.O. Box 27687, Raleigh, NC 
27611-7687, (919) 733-2747. If you desire to 
speak at the public hearing, notify John P. Barkley 
at least three days prior to the public hearing. 
Oral presentation lengths may be limited depend- 
ing on the number of people that wish to speak at 
the public hearing. At the discretion of the 
Chairman, the public may also be allowed to 
comment on the rules at the Commission Meeting. 
IT IS VERY IMPORTANT THAT ALL IN- 
TERESTED AND POTENTIALLY AF- 
FECTED PERSONS, GROUPS, 
BUSINESSES, ASSOCIATIONS, INSTI- 
TUTIONS, OR AGENCIES MAKE THEIR 
VIEWS AND OPINIONS KNOWN TO THE 
COMMISSION FOR HEALTH SERVICES 
THROUGH THE PUBLIC HEARING AND 
COMMENT PROCESS, WHETHER THEY 
SUPPORT OR OPPOSE ANY OR ALL PRO- 
VISIONS OF THE PROPOSED RULES. THE 
COMMISSION FOR HEALTH SERVICES 
MA Y ADOPT MORE OR LESS STRINGENT 
STANDARDS OR REQUIREMENTS THAT 
MAY DIFFER FROM THOSE BEING NO- 
TICED HEREIN, WITHOUT RENOTICE OR 
REHEARING, IF THE COMMISSION FOR 
HEALTH SERVICES DETERMINES THAT 
THE FINAL ADOPTED RULES ARE A LOG- 
ICAL OUTGROWTH OF THE NOTICE, 
PUBLIC HEARINGS AND THE HEARING 
COMMENTS RECEIVED. 

lursuant to G.S. 150B-1 1(4), a fiscal note has 
been prepared for I5A NCAC ISC .2101 - .2104 
and may be obtained from the agency. 

CHAPTER 18 - ENVIRONMENTAL HEALTH 

SLBCHAPTER 18A - SANITATION 

SECTION .1900 - SEWAGE TREATMENT AND 
DISPOSAL SYSTEMS 

.1945 AVAILABLE SPACE 



(a) Sites shall have sufficient available space to 
permit the installation and proper functioning of 
ground absorption sewage treatment and disposal 
systems, based upon the square footage of 
nitrification field required for the application rate 
long-term acceptance rate determined in accord- 
ance with these Rules. 

(b) Sites shall have sufficient available space for 
a repair area, equal to- the afea dotorminod m 
Piul e . I9 ' 15(a) ef- this Section, based upon the 
square footage of the nitrification field deter- 
mined in accordance with these Rules to accom- 
modate the installation of a replacement system 
specified in Rule .1955, .1956, or .1957 of this 
Section. The original system layout, the repair 
area, and the replacement system shall be desig- 
nated by the local health department and shall 
be shown on the Improvement Permit initially 
issued for a site. 

(c) The repair area requirement of Paragraph 
(b) of this Rule shall not apply to a lot or tract 
of land: 

(1) which is specifically described in a docu- 
ment on file with the local health depart- 
ment on July 1, 1982, or which is 
specifically described in a recorded deed 
or a recorded plat on January 1, 1983; and 

(2) which is of insufficient size to satisfy the 
repair area requirement of Paragraph (b) 
of this Rule, as determined by the local 
health department; and 

(3) on which a ground absorption sewage 
treatment and disposal system with a de- 
sign daily flow of: 

(A) no more than 480 gallons is to be in- 
stalled; or 

(B) more than 480 gallons is to be installed 
if application for an improvements permit 
which meets the requirements of Rule 
.1937(c) of this Subchapter is received by 
the local health department on or before 
April 1, 1983. 

(d) Although a lot or tract of land is exempted 
under Paragraph (c) from the repair area re- 
quirement of Paragraph (b), the maximum feasi- 
ble area, as determined by the local health 
department, shall be allocated for a repair area. 

Statutory Authority G.S. I30A-335(e) and (f). 

SLBCHAPTER I8C - WATER SUPPLIES 

SECTION .1500 - WATER QUALITY 
STANDARDS 

.1534 COLIFORM SAMPLING 

(a) The provisions of 40 C.F.R. 141.21 are 
hereby adopted by reference in accordance with 
G.S. 150B- 14(c), with the following exceptions: 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



728 



PROPOSED RULES 



(1) The provision of 40 C.F.R. 141.21(a)(2) 
concerning the reduction of monitoring 
frequency for community water systems 
serving 25 to 1,000 persons is not adopted; 

(2) The provision of 40 C.F.R. 141.21(b)(3) 
concerning collection of large volume re- 
peat samples in containers of any size is 
not adopted; and 

(3) The provision of 40 C.F.R. 141.21(c)(2) 
concerning waiver of the 24-hour limit for 
re-sampling is not adopted. 

(b) An adjacent water system shall submit 
samples monthly from each section of the water 
system supplied from a separate source. The 
minimum number of samples each month per 
section is based on the population served by the 
section and shall be determined by the table in 
40 C.F.R. 141.21(a)(2). 

Authority G.S. I30A-315; P.L. 93-523; 40 C.F.R. 
141.21. 

SECTION .2100 - OPERATING PERMITS 

.2101 APPLICATION FOR PERMIT 

(a) An application for the issuance or renewal 
of an operating permit for a community water 
system shall be made on forms approved by the 
Department. An application shall include the 
following information: 

( 1 ) Name and identification number of the 
community water system; 

(2) Name, address and social security number 
of the supplier of water; 

(3) Name, address and certification number 
of the certified operator in responsible 
charge of the community water system; 

(4) Name of each certified laboratory which 
provides analyses of water samples; and 

(5) Population served by the community wa- 
ter system. 

(b) An operating permit must be obtained for 
a new community water system before water 
service is provided to the first connection. 

(c) An operating permit shall be renewed an- 
nually. 

Statutory Authority G.S. 130A-328. 

.2102 FEES 

(a) The fee for issuance or renewal of an oper- 
ating permit is set forth in G.S. 130A-328. 

(b) Payment shall be made by check, payable 
to the Department of Environment, Health, and 
Natural Resources, and shall accompany the ap- 
plication. 

(c) A new community water system which ap- 
plies for an operating permit after December 31 



of any year shall pay one half the annual fee set 
forth in G.S. 130A-328. 

(d) The fee for an operating permit issued be- 
tween January 1, 1992 and June 30, 1992 shall 
be one half the fee set forth in G.S. 130A-328. 

Statutory Authority G.S. 130A-328. 

.2103 REVOCATION 

(a) The Department may revoke or suspend an 
operating permit when it is found that a supplier 
of water has: 

(1) Failed to pay the annual fee; 

(2) Failed to submit a complete permit appli- 
cation or provided fraudulent or mislead- 
ing information in a permit application; 
or 

(3) Failed to comply with rules governing 
community water systems set forth in 15A 
NCAC 18C. 

(b) Action to revoke or suspend an operating 
permit shall not preclude the Department from 
seeking other remedies authorized by Part 2, Ar- 
ticle 1 of Chapter 130A of the General Statutes. 

Statutory Authority G.S. 130A-328. 

.2104 EFFECTIVE DATES 

(a) Operating permits are required for all com- 
munity water systems as of January 1, 1992. 
Permits issued from January 1, 1992 through 
June 30, 1992 shall be valid until July 1, 1992. 

(b) Operating permits issued or renewed after 
June 30, 1992 shall be valid for one year. 

Statutory Authority G.S. 130A-328. 

****************** 



1\ otice is hereby given in accordance with G.S. 
I SOB- 12 that the Commission for Health Services, 
Department of Environment, Health, and Natural 
Resources intends to repeal rules cited as 15A 
NCAC 23 .0201, .0310 and amend rules cited as 
ISA NCAC 23 .0202, .0204, .0303, .0305 - .0306, 
.0309, .0401. 

1 he proposed effective date of this action is 
February 1, 1992. 

1 he public hearings will be conducted at the fol- 
lowing Dates, Times and Locations: 

October 16, 1991 

1:30 p.m. 

Ground Floor Hearing Room 

Archdale Building 



729 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



512 North Salisbury Street 
Raleigh, NC 

October 21, 1991 

7:30 p.m. 

Willis Building Auditorium 

Eastern North Carolina Regional Development 

Institute 

Corner of First and Reade Streets 

Greenville, NC 

October 24, 1991 

7:30 p.m. 

Auditorium 

Forsyth- Stokes Mental Health Center 

725 Highland Avenue 

Winston-Salem, NC 

C_^ omment Procedures: A 11 persons interested in 
these matters are invited to attend the public 
hearing. Written comments may be presented at 
the public hearing or submitted to John P. 
Barkley, DEHNR, P.O. Box 27687, Raleigh, NC 
27611-7687, (919) 733-2747. If you desire to 
speak at the public hearing, notify John P. Barkley 
at least three days prior to the public hearing. 
Oral presentation lengths may be limited depend- 
ing on the number of people that wish to speak at 
the public hearing. At the discretion of the 
Chairman, the public may also be allowed to 
comment on the rules at the Commission Meeting. 

IT IS VERY IMPORTANT THAT ALL INTER- 
ESTED AND POTENTIALLY AFFECTED PER- 
SONS, GROUPS, BUSINESSES, 
ASSOCIATIONS, INSTITUTIONS, OR AGEN- 
CIES MAKE THEIR VIEWS AND OPINIONS 
KNOWN TO THE COMMISSION FOR HEALTH 
SERVICES THROUGH THE PUBLIC HEARING 
AND COMMENT PROCESS, WHETHER THEY 
SUPPORT OR OPPOSE ANY OR ALL PRO- 
VISIONS OF THE PROPOSED RULES. THE 
COMMISSION FOR HEALTH SERVICES MAY 
ADOPT MORE OR LESS STRINGENT STAND- 
ARDS OR REQUIREMENTS THAT MA Y DIFFER 
FROM THOSE BEING NOTICED HEREIN, 
WITHOUT REN0T1CE OR REHEARING, IF 
THE COMMISSION FOR HEALTH SERVICES 
DETERMINES THAT THE FINAL ADOPTED 
RULES ARE A LOGICAL OUTGROWTH OF THE 
NOTICE, PUBLIC HEARINGS AND THE HEAR- 
ING COMMENTS RECEIVED. 

CHAPTER 23 - DIVISION OF POSTMORTEM 
MEDICOLEGAL EXAMINATION 

SECTION .0200 - FEES 

.0201 MEDICAL EXAMINER FEE (REPEALED) 



Statutory Authority G.S. J30A-381; 130A-387; 
130 A- 39 3. 

.0202 PATHOLOGY FEE 

For each autopsy ordered by a county medical 
examiner or the chief medical examiner, the 
pathologist shall receive a fee of four hundred 
dollars ($400.00) when the autopsy report is re- 
ceived at the Office of the Chief Medical Exam- 
iner within 6© 120 days from the date of autopsy. 
The fee shall be thre e hundred fifty dollars 
($350.00) fef reports received aftet 6© days b«t- 
within -130 days from the date ef- autopoy. There 
will be no fee for reports received after the 120 
day period, unless the Chief Medical Examiner 
determines that the delay was beyond the control 
of the pathologist. The fee shall be paid by the 
state unless the docodont is a legal rosidont ef the 
county m which death occurred, m which e v e nt 
the county ef residence shall be responsible fe* 

l 1 \\J HV. 

Statutory Authority G.S. 130 A- 389(c). 

.0204 HOSPITAL FEE 

A fee of twenty dollars ($20.00) forty dollars 
($40.00) is paid by the state to a hospital when a 
county medical examiner orders a body taken to 
the hospital and later examines the body in that 
facility. No payment is due a hospital when an 
autopsy is performed in that facility. No pay- 
ment is due when the county medical examiner 
utilizes a hospital emergency room or other hos- 
pital facility for examination of a body unless 
such examiner expressly orders a body, that 
would otherwise go to a funeral home or morgue, 
to be transported to the hospital for examination. 

Statutory Authority G.S. 130 A- 381; I30A-393. 

SECTION .0300 - MIGRANT WORKER BODY 
DISPOSITION 

.0303 SOCIAL SERVICES NOTIFICATION 

The Department of Social Services in the 
county where the body of a migrant farm worker 
or dependent is found shall notify the Office of 
the Chief Medical Examiner of the death and 
furnish any information respecting the deceased 
including: 

( 1 ) place of employment; 

(2) name names of crew leader and farmer; 

(3) social security number; 

(4) permanent residence; and 

(5) name, address and telephone number of any 
relative or interested person. 

Statutory Authority G.S. 130A-418. 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



730 



PROPOSED RULES 



.0305 TIME LIMIT TO CLAIM BODY 

Within M J_0 days after receipt of notification, 
next-of-kin or any interested person willing to 
assume responsibility for final disposition must: 

(1) notify the Office of the Chief Medical Ex- 
aminer of their intentions to claim or not 
claim the body; and 

(2) take possession of the body if claimed. 

Statutory Authority G.S. 130A-418. 

.0306 TRANSPORTATION COSTS 

(a) An itemized list of estimated funeral ex- 
penses and a signed statement that the party is 
unable to meet transportation costs shall be sub- 
mitted to the Office of the Chief Medical Exam- 
iner before any payment shall be made. 

(b) All payments shall be made jointly to a»y 
the party assuming responsibility for final dispo- 
sition and to the firm handling the disposition 
arranging the transportation of the body. 

Statutory Authority G.S. 130A-417; 130A-418. 

.0309 CLAIMS MADE AFTER 
TRANSPORTATION 

(a) If upon death of a migrant farm worker or 
dependent, the next-of-kin or interested persons 
claim the body and make their arrangements for 
transportation and disposition prior to notifica- 
tion of the Office of the Chief Medical Examiner, 
they may claim defrayment of transportation ex- 
penses up to two hundred dollars ($200.00) in the 
following manner: 

( 1 ) They must supply the Office of the Chief 
Medical Examiner with details of their 
case; and 

(3) A» information pack e t will be seftt \» 
them; 

(4} [2| They will in writing indicate their ina- 
bility to pay transportation expenses, and 
will enclose an itemized list of funeral 
transportation expenses. 

(b) Any ensuing payment shall be made in ac- 
cordance with Rule .0306 of this Section. 

Statutory Authority G.S. I30A-417; 130A-418. 

.0310 RESPONSIBILITY FOR TRANSPORT 
AND DISPOSITION (REPEALED) 

Statutory Authority G.S. I30A-417; I30A-4/8. 

SECTION .0400 - INVESTIGATIONAL 
PROCEDURES 

.0401 UNCLAIMED BODIES 

The chief medical examiner shall retain charge 
or control of an unclaimed body for a period of 



ten days. During this period, reasonable effort 
shall be made to locate relatives of the decedent. 
After the search for relatives has been completed 
and the required ten day period has passed, each 
unclaimed body chall may be disposed of by 
cremation. The ashes shall be retained in the 
control of the chief medical examiner for a period 
of three years. During this time appropriate 
family members of the decedent may claim and 
receive the ashes. At the end of the three years 
any unclaimed ashes shall be disposed of » a» 
appropriate manner, in accordance with G.S. 
90-2 10.46(f). 

Statutory Authority G.S. 130A-381; 130A-393. 
****************** 



iV otice is hereby given in accordance with G.S. 
1 SOB- 12 that the Commission for Health Services, 
Department of Environment, Health, and Natural 
Resources intends to amend rule(s) cited as 15A 
NCAC 24 A .0202, .0302 - .0303, .0402. 

1 he proposed effective date of this action is 
February 1, 1992. 

1 he public hearing will be conducted at the fol- 
lowing Dates, Times, and Locations: 

October 16, 1991 

1:30 p.m. 
Ground Floor Hearing Room 

Archdale Building 

512 North Salisbury Street 

Raleigh, N.C. 

October 21, 1991 

7:30 p.m. 

Willis Building Auditorium 

Eastern North Carolina Regional Development 

Institute 

Corner of First and Reade Street 

Greenville, N.C. 

October 24, 1991 

7:30 p.m. 

A uditorium 

Forsyth- Stokes Mental Health Center 

725 Highland Avenue 

Winston-Salem, N.C. 



Cc 



■ omment Procedures: All persons interested in 
these matters are imited to attend the public 
hearing. Written comments may be presented at 
the public hearing or submitted to John P. 



731 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



Barkley, DEHNR, P.O. Box 27687, Raleigh, NC 
27611-7687, (919) 733-2747. If you desire to 
speak at the public hearing, notify John P. Barkley 
at least three days prior to the public hearing. 
Oral presentation lengths may be limited depend- 
ing on the number of people that wish to speak at 
the public hearing. At the discretion of the 
Chairman, the public may also be allowed to 
comment on the rules at the Commission Meeting. 
IT IS VERY IMPORTANT THAT ALL IN- 
TERESTED AND POTENTIALLY AF- 
FECTED PERSONS, GROUPS, 
BUSINESSES, ASSOCIATIONS, INSTI- 
TUTIONS, OR AGENCIES MAKE THEIR 
VIEWS AND OPINIONS KNOWN TO THE 
COMMISSION FOR HEALTH SERVICES 
THROUGH THE PUBLIC HEARING AND 
COMMENT PROCESS, WHETHER THEY 
SUPPORT OR OPPOSE ANY OR ALL PRO- 
VISIONS OF THE PROPOSED RULES. THE 
COMMISSION FOR HEALTH SERVICES 
MA Y ADOPT MORE OR LESS STRINGENT 
STANDARDS OR REQUIREMENTS THAT 
MAY DIFFER FROM THOSE BEING NO- 
TICED HEREIN, WITHOUT RENOTICE OR 
REHEARING, IF THE COMMISSION FOR 
HEALTH SERVICES DETERMINES THAT 
THE FINAL ADOPTED RULES ARE A LOG- 
ICAL OUTGROWTH OF THE NOTICE, 
PUBLIC HEARINGS AND THE HEARING 
COMMENTS RECEIVED. 

CHAPTER 24 - GENERAL PROCEDURES FOR 
PUBLIC HEALTH PROGRAMS 

SUBCHAPTER 24A - PAYMENT PROGRAMS 

SECTION .0200 - ELIGIBILITY 
DETERMINATIONS 

.0202 DETERMINATION OF FINANCIAL 
ELIGIBILITY 

(a) A patient must meet the financial eligibility 
requirements of this Subchapter to be eligible for 
benefits provided by any of the payment pro- 
grams, except as provided in Paragraph (b) of 
this Rule. Financial eligibility for all state funded 
payment programs shall be determined through 
application of the General Assembly's financial 
eligibility scales for non-medicaid medical pro- 
grams. The definition of annual net income in 
Rule .0203 of this Subchapter and the definitions 
of family in Rule .0204 of this Subchapter shall 
be used in applying the General Assembly's fi- 
nancial eligibility scales and the federal poverty 
scale for payment program eligibility purposes. 

(b) A person shall be financially eligible for the 
federal AIDS Drug Reimbursement Program if 



the person's net income is at or below 85 percent 
of the federal poverty level. 

(c) The financial eligibility requirements of this 
Subchapter shall not apply to: 

(1) Migrant Health Program; 

(2) Children's Special Health Services when 
the requirements of 15A NCAC 21 F 
.0800 are met; 

(3) School Health Program financial eligibility 
determinations performed by a local 
health department which has chosen to 
use the financial eligibility standards of the 
Department of Public Instruction's free 
lunch program; 

(4) Prenatal outpatient services sponsored 
through local health department delivery 
funds, 15A NCAC 21C .0200; or through 
Perinatal Program high risk maternity 
clinic reimbursement funds, 15A NCAC 
21C .0300. 

(d) Except as provided in Paragraph (e) of this 
Rule, once an individual is determined financially 
eligible for payment program benefits, the indi- 
vidual shall remain financially eligible for a pe- 
riod of one year after the date of application for 
financial eligibility unless there is a change in the 
individual's family size pursuant to Rule .0204 
of this Subchapter or his family's financial re- 
sources or expenses during that period. If there 
is a change, financial eligibility for payment pro- 
gram benefits must be redetermined. Financial 
eligibility must be redetermined at least once a 
year. 

(e) For purposes of the Kidney Program, once 
an individual is determined to be financially eli- 
gible, if the application for financial eligibility was 
received by the Department in the fourth quarter 
of the fiscal year, the individual shall remain fi- 
nancially eligible for benefits under the Kidney 
Program until the end of the next fiscal year un- 
less there is a change in the individual's family 
size pursuant to Rule .0204 of this Subchapter 
or his family's financial resources or expenses 
during that period. 

(£)• U the most current financial eligibility form 
©ft file with the Dopartmont shows that the pa- 
tient was financially oligiblo e» the date aft au- 
thorization roquoot was roooivod, the 
authorization roquoot fftay- be approved &e leftg 
as the authorized service * does set extend more 
tha» 90 days a&ef the term ef- eligibility expir e s. 

Statutory Authority G.S. 130A-5(3); 130A-I24; 
130A-127; I30A-I29; 130A-177; I30A-205. 

SECTION .0300 - ELIGIBILITY PROCEDURES 

.0302 AUTHORIZATIONS AND CLAIMS 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



732 



PROPOSED RULES 



PROCESSING TIME FRAMES 

The following time frames shall apply to all 
payment programs: 

(1) Roquosto fof authorisation An Authori- 
zation Request must be received by the De- 
partment within 90 days after the date of 
service or it will be denied. 

(2) The Department shall respond to an au- 
thorisation roquoot Authorization Request 
within 45 days after receipt. 

(3) If additional information is requested, this 
information must be received within 90 days 
after the date of service or within 30 days 
after the date of the Department's request, 
whichever is later, or the Authorization Re- 
quest will be denied. 

(4) The Department shall approve or deny an 
authorisation roquost Authorization Re- 
quest within 45 days alter receipt of the all 
necessary information. 

(5) A claim for payment must be received by 
the Department within 180 days after the 
date of service or within 45 days after the 
date of authorization approval, whichever is 
later, or the claim will be denied. Cor- 
rections to claims and requests for payment 
adjustment must be received by the Depart- 
ment within one year after the date of service 
or within 45 days after the date the claim is 
paid or returned for additional information, 
whichever is later, or the claim will be de- 
nied. 

(6) A claim shall show payments by other third 
party payors or it shall show that all other 
payors have denied payment or that there 
are no other payors. Once another payor 
has been billed, if no response has been re- 
ceived within 80 days after the date of ser- 
vice, the provider may bill the Department, 
but the claim shall indicate that the other 
payor has been billed and no response has 
been received. If payment is received later 
from the other payor, the provider shall re- 
fund the Department. Providers of phar- 
macy outpatient services are required to bill 
Medicaid. However, they are not required 
to bill other third party payors and wait 80 
days before billing the Department but are 
required to refund the Department if other 
third party payments are received. 

(7) The Department shall pay or deny a claim 
within 45 days after receipt of a completed 
claim. 

(8) R.oqueot9 fo* authorisation Authorization 
Requests and claims for payment shall be 
submitted on forms approved by the De- 
partment. 



Statutory Authority G.S. BOAS (3 J; 130 A- 124; 
130A-127; 130A-I29; 130A-177; J30A-205. 

.0303 PAYMENT LIMITATIONS 

(a) Payment program payments will be made 
for authorized services only when funds are 
available. 

(b) During the last six months of the fiscal year, 
the State Health Director may limit payment 
program benefits that can be authorized when the 
total amount of outstanding authorizations, plus 
the estimated authorizations for the remainder 
of the fiscal year, less estimated cancellations, 
exceeds 100 percent of the program's cash bal- 
ance. The State Health Director shall rescind the 
limitations at the end of the fiscal year, or prior 
to the end of the fiscal year if sufficient funds 
become available to authorize full program ben- 
efits for the remainder of the fiscal year. 

(c) Payment program benefits shall be available 
only for services or appliances which are not 
covered by another third party payor or which 
cannot be paid for out of funds received in 
settlement of a civil claim. Patients are respon- 
sible for applying for Medicaid or Medicare ben- 
efits to which thev may be entitled. However, 
payment program benefits shall be available for 
Children's Special Health Services sponsored 
clinic patients who cannot reasonably be exam- 
ined or treated by a .Medicaid provider or an au- 
thorized provider for another third party payor 
because of transportation problems, a need for 
emergency care, or similar exceptional situations. 
All exceptions must be approved by the Chil- 
dren's Special Health Services program's medical 
director. Also, Children's Special Health Ser- 
vices may make payments for services provided 
to Medicaid patients when acting as a Medicaid 
provider under an agreement making the pro- 
gram eligible for reimbursement from Medicaid. 
Providers shall take reasonable measures to col- 
lect other third party payments. For the pur- 
poses of this Subchapter, third party payor 
means any person or entity that is or may be in- 
directly liable for the cost of services or appli- 
ances furnished to a patient. Third party payors 
include, without limitation, the following: 

(1) School services, including physical or oc- 
cupational therapy, speech and language 
pathology and audiology services, and 
nursing services for special needs children; 

(2) Medicaid; 

(3) Medicare, Part A and Part B; 

(4) Insurance; 

(5) Social Services; 

(6) Worker's compensation; 

(7) CHAMPUS; and 

(8) Head Start programs. 



733 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



(d) If prior to the Department's payment for 
particular services or appliances, the provider, the 
patient, or a person responsible for the patient 
receives partial or total payment for the services 
or appliances from a third party payor, or re- 
ceives funds in settlement of a civil claim, the 
Department shall pay only the amount, if any, 
by which the Department's payment rate exceeds 
the amount received by the person. For the 
purpose of this Rule the Department's payment 
rate means the rate of reimbursement established 
in 15A NCAC 24A .0400. 

(e) Notwithstanding Paragraph (d) of this Rule, 
when the provider, the patient or a person re- 
sponsible for the patient receives other third 
party payments equal to or exceeding the De- 
partment's payment rate, the Department shall 
pay the difference between the other third party 
payments and the provider's charge for an 
adopted child that meets the requirements of 15A 
NCAC 21F .0801. The Department's payment 
shall not exceed the payment rate in Section 
.0400 of the Subchapter. 

(f) If after the Department makes payment for 
particular services or appliances, the provider, the 
patient, or a person responsible for the patient 
receives partial or total payment for the services 
or appliances from a third party payor, or re- 
ceives funds in settlement of a civil claim which 
are available to pay for the services or appliances, 
the person receiving the payment shall reimburse 
the Department to the extent of the amount re- 
ceived by the person without exceeding the 
amount of the Department's prior payment to 
the provider. This reimbursement shall be made 
to the Department within 45 days after receipt 
of the third party payment. 

(g) Notwithstanding Paragraph (f) of this Rule, 
if after the Department makes payment for par- 
ticular services or appliances for an adopted child 
that meets the requirements of 15A NCAC 21 F 
.0801, the provider receives partial or total pay- 
ment from a third party payor, the provider shall 
only be required to reimburse the Department 
the amount by which the total of payments ex- 
ceeds the provider's charge. 

(h) If the Department requests a refund of a 
payment made to a provider, the refund shall be 
made to the Department within 45 days after the 
date of the refund request. 

Statutory Authority G.S. I30A-5(3); 13QA-124; 
BOA- 127; 1 30 A- 1 29; 1 '30 A- 177; 130A-205. 

SECTION .0400 - REIMBURSEMENT 

.0402 REIMBURSEMENT FOR INPATIENT 
HOSPITALIZATION 



(a) The Department shall reimburse providers 
of authorized inpatient hospitalization services 
undor the Tuberculosis Program a»4 the Canc e r 
Program at the Medicaid per diem rate in effect 
at the time the claim is received by the Depart- 
ment, except in the Migrant Health Program. 
Wh e n the Medicaid pef diom Fate changes te- the 
"oxcqqs days" pef diom fate as provided «■ the 
Modicaid r e imburs e ment plan, the Department 
shall reimburse at the "excess dayo" rate fof sef- 
vio e s provided under these programs. 

fb4 The Department shall roimburoo providers 
ef authorized inpationt hospitalization sorvioos 
under Children's Special Health Scrvicos a«4 the 
Sicldo GeU Syndromo Program as follows: 

(44 The fifst- Bine days ef each inpationt 
hospitalization shall he reimbursed at the 

Tiill \ .' .1.-1 1 /^ o i ii ^^^JL ilii' in r ' ( 1 1 ' t t1 » \t ' 1 1 1 1 1 1 1 * O Milt 

Modicaid roimburoomont plan m effect at 

Li i\j ii_i i ir 1 1 ivy uiuim rCT rucuiTUCT \j y cxro i_^ u 

p ailment. The Department shall con 

timlfi ♦ i~\ ri-it fn KliiTtl <1 4 tl^^ Ti 1 1 1 Mn4if aiH ^^a£ 
yT ■ i-tyy-\ j^^^^a ^^^^ 1 I -> . * . j fc ^^^j^^^^^^^^^ ^^^^^*^ ^^^^^^^^ fl^^^ 

tnrTrT i ii tv itti 1 1 t\-' -VJ rTCTTrrcri o j lt i mi il'j i i i tv 

Fate changes te- the "excoss days" Fate as 
provid e d » the Modicaid reimbursement 
plan; 
f3) Subsequent days ef e ach inpati e nt 
hospitalization shall he reimbursed at the 
Modicaid "oxcoss days" peF diom Fate 
specified » the Modicaid reimbursement 

L'1U-1T 11 1 \J 1 I \^J I Kl II l\J 111 1 117 1 1 l\J U1LLL1 11 rCT HT 

coivod by the Department. 

(b) £e} The Department shall reimburse provid- 
ers of authorized inpatient hospitalization ser- 
vices under the Migrant Health Program at the 
rate of two hundred dollars ($200.00) per day or 
the hill Medicaid per diem rate, whichever is less. 

Statutory Authority G.S. I30A-5(3); 130A-I24; 
BOA- 127; BOA- 129; BOA- 177; BOA- 205. 

****************** 



1\ otice is hereby given in accordance with G.S. 
BOB- 12 that the EHNR - State Registrar intends 
to amend rules cited as 15A NCAC 19H .0601, 
.0701 - .0702, .0901, .1202. 

1 he proposed effective date of this action is 
January 1, 1992. 

1 he public hearing will be conducted at 3:00 
p.m. on October 17, 1991 at the Norton Board 
Room, Sixth Floor Cooper Memorial Building. 
225 North McDowell Street, Raleigh, NC. 



6:12 NORTH CAROLINA REGISTER September 16, 1 99 1 



734 



PROPOSED RULES 



Co 



,-ommenl Procedures: Any person requiring 
information concerning the proposed rules should 
contact A. Torrey McLean, Vital Records, P. O. 
Box 29537, Raleigh, A'C 27626-0537, (919) 
733-3000. Written comments on these rules may 
be sent to M. McLean at the above address or 
submitted at the public hearing. If you desire to 
speak at the public hearing, notify M. McLean at 
least three days prior to the public hearing. 

CHAPTER 19 - HEALTH: EPIDEMIOLOGY 

SUBCHAPTER I9H - VITAL RECORDS 

SECTION .0600 - CERTIEIED COPIES 

.0601 BIRTH CERTIFICATES 

(a) There shall be three forms of copies of birth 
certificates: 

(1) a photocopy of the original record ex- 
cluding medical and health related infor- 
mation with facsimile of the signature of 
the State Registrar and raised seal and 
date issued; and 

(2) a typed copy prepared on a form printed 
on safety paper with facsimile of the sig- 
nature of the State Registrar and raised 
seal; the form shall provide at least the 
following items of information: 

(A) name and sex of child; 

(B) date and place of birth; 

(C) names, ages (at time of birth), and 
birthplaces of father and mother; 

(D) date filed with local registrar; 

(E) certificate number; 

(F) date of issue; and 

(G) items amended and date of amendment; 
and 

(3) a typed wallet-size card with facsimile of 
the signature of the State Registrar pro- 
viding as a minimum the following items 
of information: 

(A) name and sex of child; 

(B) date and place of birth; 

(C) date filed with local registrar; 

(D) certificate number; 

(E) date of issue; and 

(F) changes of names by court order noted 
on back for persons older than 15 years 
unless good cause is shown for deleting 
the notation. 

(b) A wallet-size card shall be issued when 
specifically requested. 

(c) A typed copy shall be issued when specif- 
ically requested, when the original certificate 
cannot be photocopied, when the original has 
been corrected or amended, or when the record 
is that of an adopted or legitimated person. 



(d) A photocopy shall be issued when specif- 
ically requested or whenever it is most conven- 
ient except in cases in which a typed copy is 
required. 

(e) In cases when the individual is known to 
be deceased, the word "DECEASED" shall be 
added to the certificate in a prominent location. 
This procedure shall apply to copies issued by 
the Vital Records Section and to each register of 
deeds or local health department that issues cer- 
tified copies of birth certificates. 

Statutory Authority G.S. 130A-92(7). 

SECTION .0700 - FEES AND REFUNDS 

.0701 ROUTINE REQUESTS FOR CERTIFIED 
COPIES 

The fee for searching for a certificate of birth, 
death, marriage or divorce shall be ftw dollaro 
($5.00) ten dollars ($10.00), which shall include 
the cost of a search of the year indicated and if 
necessary the year immediately prior to and sub- 
sequent to the indicated year. This fee also cov- 
ers issuance of a copy if the record is found. If 
the record is not located, the fee shall be retained 
for providing the search. 

Statutory Authority G.S. 130A-92(7); 130A-93. 

.0702 RESEARCH REQUESTS 

(a) The State Registrar may permit the use of 
data from vital records for research purposes. 
The State Registrar shall require the applicant to 
specify in writing the conditions under which the 
records or data will be used, the purpose of the 
research, the research protocol, and such other 
data as may be deemed necessary by the State 
Registrar. 

(b) The State Registrar may determine fees 
charged for searching or providing information 
from, or non-certified copies of the vital records 
based on the estimated cost of rendering the ser- 
vice. An hourly rate or charge per name searched 
may be imposed. The fee shall not exceed ftve 
dollaro ($5.00) ten dollars ($10.00) per name 
searched, in addition to standard applicable fees 
for expedited service , if requested. 

(c) Vital records or data provided under this 
Rule shall be used only for the purposes de- 
scribed in the application. 

Statutory Authority G.S. 130.4-92(7); 130A-93. 

SECTION .0900 - CORRECTIONS AND 
AMENDMENTS 

.0901 ERRORS 



735 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



■fh» State Rogiotrar may- correct a»y obvious 
clerical e? typographical orror ©f orror ©f omis 
skw* by his »wr observation »f by request from 
the p e rson Bf institution responsible fef Tiling the 
original certificate) e* from the local registrar. 
Although those corroctod records shall net be 
marked "amendod", a notation shall be made e» 
the back ef the certificat e t© indicat e the oourco 
a©4 the date ©f the correction. 

(a) The State Registrar may correct errors by 



his own observation, by request from the person 
or institution responsible for filing the original 
certificate, by the informant, by the local register 
of deeds, or by_ the local registrar. The local 
register of deeds shall be notified of all such cor- 
rections either by the State Registrar or through 
the local registrar as provided in Paragraph (b) 
of this Rule. Upon written notification, the local 
register of deeds shall then ensure that the county 
copy of the certificate is corrected so as to pro- 
vide the same information as the original certif- 
icate filed in the Vital Records Section. If 
deemed necessary by the State Registrar, a re- 
placement copy shall be provided to the register 
of deeds. When a certificate has been corrected 
or replaced in the county, that certificate be- 
comes the official county record. Only official 
records shall be certified. 



(b) Prior to such time as the record is for- 
warded to the State Registrar, each local registrar 
is empowered to correct errors on the original 
record. The local registrar (or designated agent) 
shall notify the register of deeds in writing of the 
correction^ ) made on the original record and the 
register of deeds then shall make the same 
correction(s) on the county copy of the certif- 
icate. If deemed appropriate by the State 
Registrar, the local registrar shall provide the 
register of deeds with a replacement copy after a 
correction has been made on the original record. 

(c) Although records corrected in this manner 
shall not be marked "amended," a notation shall 
be made on the certificate indicating the source 
of the information and the date of the correction. 

Statutory Authority G.S. /30A-92(7). 

SECTION .1200 - REMOVAL OF GRAVES 

.1202 FORMS 

Source of Forms. The Removal of Graves 
Certificate may be obtained from the local regis- 
ter of deeds office. Additional supplies of these 
forms may be ordered from Vital Records Sec- 
tion, i^dr Be* 27687, Raleigh, North Carolina 
27611 7687. 



Statutory Authority G.S. I30A-92(7). 

TITLE 20 - DEPARTMENT OF STATE 
TREASURER 



IVotice is hereby given in accordance with G.S. 
J SOB- J 2 that the Boards of Trustees, Teachers' 
and State Employees' Retirement System and 
Local Governmental Employees' Retirement Sys- 
tem intends to adopt rules cited as 20 NCA C 2 A 
.0504; 2B .0404; 2C .0404. 

1 he proposed effective date of this action is 
January 1, 1992. 

1 he public hearing will be conducted at 10:00 
a.m. on October 17, 1991 at the Conference 
Room, Room 100, Albemarle Building, 325 North 
Salisbury Street, Raleigh, North Carolina 
27603-1388. 

Comment Procedures: A written copy of the 
comments will be required of all persons wishing 
to speak at a public hearing. All written com- 
ments must be received by 4:30 p.m. on October 
17, 1991. Written comments should be sent to the 
APA Coordinator at the address above. 

CHAPTER 2 - RETIREMENT SYSTEMS 

SUBCHAPTER 2A - DIVISIONAL RULES 

SECTION .0500 - GENERAL PROCEDURES 

.0504 DIRECT DEPOSIT OF MONTHLY 
BENEFIT PAYMENTS 

(a) This Rule applies to any individual case in 
which a beneficiary's monthly benefit was paid 
via electronic funds transfer (EFT) or direct de- 
posit, when such EFT was suspended by the 
Division in error. This Rule does not apply to 
any individual case involving a delay by this Di- 
vision to initiate an EFT or a change in an ex- 
isting EFT arrangement requested by a 
beneficiary. 

(b) The Division may reimburse non-sufficient 
fund charges incurred by a beneficiary due to the 
suspension in error of an existing EFT arrange- 
ment when the beneficiary was not properly no- 
tified of the suspension of such arrangement and 
upon receipt of satisfactory proof that such 
charges were incurred. 

(c) Any other bad check service charges or fees 
imposed by any financial institution or merchant 
may be reimbursed at the discretion of the Divi- 
sion Director upon receipt of satisfactory proof 
that such charges were incurred. 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



736 



PROPOSED RULES 



(d) Any such reimbursement of NSF or bad 
check service charges shall be paid from the 
Pension Accumulation Fund of the Retirement 
System in which the beneficiary is in receipt of a 
benefit. 

Statutory Authority G.S. 128-21(3); 128-21(15); 
128-28(g); 135-1(3); 135-1(16); 135-6(f); 
135-52; 135-58 (a); 135-10/(3); 135-102. 

SUBCHAPTER 2B - TEACHERS' AND STATE 
EMPLOYEES' RETIREMENT SYSTEM 

SECTION .0400 - EMPLOYER 
CONTRIBUTIONS 

.0404 DUE DATE OF CONTRIBUTIONS 

Both the employee and employer contributions 
are due in the Raleigh offices of the Retirement 
System no later than the fifth State government 
working day of the month succeeding the month 
for which the contributions are required. Con- 
tributions received after the fifth State govern- 
ment working day of the month are delinquent. 

Statutory Authority G.S. 128-30(g). 

SUBCHAPTER 2C - LOCAL GOVERNMENTAL 
EMPLOYEES' RETIREMENT SYSTEM 

SECTION .0400 - CONTRIBUTIONS 

.0404 DUE DATE OF CONTRIBUTIONS 

Both the employee and employer contributions 
are due in the Raleigh offices of the Retirement 
System no later than the fifth State government 
working day of the month succeeding the month 
for which the contributions are required. Con- 
tributions received after the fifth State govern- 
ment working day of the month are delinquent. 

Statutory Authority G.S. 135-8(f). 

TITLE 21 - OCCUPATIONAL LICENSING 
BOARD 



iV otice is hereby given in accordance with G.S. 
1 SOB- 12 that the North Carolina Board of 
Electrolysis Examiners intends to adopt rules cited 
as 21 NCAC 19 .0101, .0201 - .0202. 

1 he proposed effective date of this action is 
January 1. 1992. 

1 he public hearing will be conducted at 1:00 
p.m. on October 17, 1991 at the Office of the 
North Carolina Real Estate Commission, 1313 
Navaho Drive, Raleigh, NC 27609. 



Co 



■ omment Procedures: Comments regarding the 
rules may be made orally or submitted in writing 
at the public hearing. Written comments not 
submitted at the hearing may be delivered to the 
North Carolina Board of Electrolysis Examiners, 
cjo 205 Westview Place, High Point, North 
Carolina 27260, so as to be received by the hearing 
date. Persons who wish to make oral comments 
at the hearing should notify Patricia Holland at 
the Board's address or at 1-800-288-3580. 

CHAPTER 19 - NORTH CAROLINA BOARD OF 
ELECTROLYSIS EXAMINERS 

SECTION .0100 - GENERAL PROVISIONS 

.0101 ADDRESS 

The mailing address of the Board is: North 
Carolina Board of Electrolysis Examiners, c/o 
205 Westview Place, High Point, North Carolina 
27260. 

Statutory Authority G.S. 88A-6. 

SECTION .0200 - APPLICATION PROCEDURES 

.0201 FEES 

(a) The following fees shall be payable to the 
Board: 

(1) Application for licensure 

as an electrologist $ 150.00 

(2) Renewal of electrologist's 

license $ 100.00 

(3) Application for certification 

as an electrology instructor $ 150.00 

(4) Renewal of instructor's 

certificate $ 40.00 

(5) Application for certification 

as a Board approved school of 
electrology $ 500.00 

(6) Renewal of school 

certification $ 250.00 

(7) Late renewal charge $ 25.00 

(8) Reinstatement of expired 

license $ 150.00 

(b) All fees shall be paid by check or money 
order, made payable to "The North Carolina 
Board of Electrolysis Examiners". 

Statutory Authority G.S. 88A-9. 

.0202 APPLICATION FOR LICENSURE: 

PRACTICING BEFORE JANUARY 1, 1992 

(a) Anyone engaged in the practice of 
electrology in this State before January 1, 1992, 
who seeks licensure as an electrologist without 
examination under the provisions of G.S. 
88A- 11(a), shall submit an application on the 



737 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



PROPOSED RULES 



form provided by the Board, accompanied by 
proof of age, proof of practice before January 1 , 
1992, proof of completion of high school or 
equivalency certificate, certification of com- 
pletion from each electrology institution attended 
with verification of the number of hours com- 
pleted in theory and clinical training, if applica- 
ble, statement from ophthalmologist or 
optometrist that vision is sufficient to perform 
duties as an electrologist, recent photograph, and 
the required application fee. 

(b) All applications for licensure under this 
Section must be either actually received by the 
Board or postmarked on or before December 31, 
1991. 

(c) Proof of age shall be shown by certified 
copy of a birth certificate. If the applicant can- 
not obtain a certified copy of the birth certificate, 



the applicant shall attach an explanation why no 
birth certificate is obtainable and shall submit 
other proof of age. Other proof of age includes 
passports, current life insurance policies held for 
at least one year showing date of birth, entries in 
family bibles, medical or school records showing 
date of birth, and marriage licenses showing age. 

(d) Proof of practice before January 1, 1992 
may be shown by copies of a privilege license or 
by sworn affidavit of a person unrelated to the 
applicant stating that the applicant did practice 
electrology in North Carolina before January 1, 
1992. 

(e) The Board may reject incomplete or partial 
applications. 

Statutory Authority G.S. S8A-6; 8SA-9; S8A-I0; 
88A-ll(a); 88A-21. 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



738 



FINAL RULES 



J\ dopted rules filed by the Departments of Correction, Revenue and Transportation are published 
in this section. These departments are not subject to the provisions ofG.S. I SOB, Article 2 requiring 
publication in the N.C. Register of proposed rules. 



U, 



pon request from the adopting agency, the text of rules will be published in this section. 



TITLE 17 
DEPARTMENT OF REVENUE 

CHAPTER 3 - INDIVIDUAL INCOME, LNHERLTANCE AND GIFT TAX DIVISION 

SUBCHAPTER 3B - INHERITANCE TAX 

SECTION .0100 - GENERAL INFORMATION 

.0107 TRANSFERS EN CONTEMPLATION OF DEATH 

The aggregate value exceeding ten thousand dollars ($10,000) of transfers to any one donee within a 
tax year by deed, grant, bargain, sale, gift, or combination thereof, made within three years prior to the 
death of the grantor, vendor, or donor, without an adequate valuable consideration, shall be presumed, 
subject to rebuttal, to have been made in contemplation of death within the meaning of this Section; 
the first ten thousand dollars ($10,000) in value shall be deemed not made in contemplation of death. 

History Sole: Statutory Authority G.S. 1 05-2; 105-262; 
Effi February 1, 1976; 
Amended Effi October 1, 1991; October 30, 1977. 

SUBCHAPTER 3C - GIFT TAX 

.0001 DEFINITIONS 

Annual Exclusion. An exclusion often thousand dollars ($10,000) is allowed for gifts of present in- 
terest for each donee during any one calendar year. 

Specific Exemption. The donor is entitled to a lifetime specific exemption of one hundred thousand 
dollars ($100,000) which is apportioned or prorated among the Class "A" donees. 

History Note: Statutory Authority G.S. 105-188; 105-262; 
Effi February I, 1976; 
Amended Effi. October 1, 1991. 

.0004 REMAINDER INTEREST 

A gift of a remainder interest is a gift of a future interest, and the annual exclusion often thousand 
dollars ($10,000) would not apply. 

Histon' Sote: Statutory Authority G.S. 105-188; 105-262; 
Effi. February 1, 1976; 
Amended Effi October 1, 1991. 

.0006 REAL PROPERTY: CREATION OF AN ESTATE BY THE ENTIRETY 

When one spouse furnishes the funds for purchase of real property titled in husband and wife creating 
an estate by the entirety, one-half of such funds is a gift on the part of the spouse furnishing the funds 
and a gift tax return is required when the value of the gift exceeds the annual exclusion of ten thousand 
dollars ($10,000). 

Histon- Sote: Statutory Authority G.S. 105-188; 105-262; 
Effi February 1, 1976; 
Amended Effi October 1, 1991. 



739 6:12 NORTH CAROLINA REGISTER September 16, 1 99 1 



FINAL RULES 



CHAPTER 4 - LICENSE AND EXCISE TAX DIVISION 

SUBCHAPTER 4C - CIGARETTE TAX 

SECTION .0500 - AFFIXATION OF STAMPS AND IMPRFNTS 

.0505 LIMITED TIME TO AFFIX TAXPAID LNDICIA (STAMPS AND IMPRINTS) 

(a) Licensed cigarette distributors shall affix proper cigarette tax indicia to cigarettes within 72 hours 
of the receipt of all unstamped cigarettes exclusive of Saturdays, Sundays and legal holidays of this 
State, and prior to any and all deliveries to other persons except deliveries to points outside the State 
and those deliveries which the State is prohibited from taxing under the Constitution or the statutes 
of the United States. 

(b) Problems and unusual circumstances regarding the affixing of tax indicia within the time specified 
in Paragraph (a) of this Rule shall be reviewed on a case by case basis. However, in no instance shall 
a distributor exceed the 72 hour requirement without prior approval from the Secretary or a duly au- 
thorized agent. 

History Note: Statutory Authority G.S. 105-113.20; 105-262; 
Eff. October 1, 1991. 

SUBCHAPTER 4D - SOFT DRLNK TAX 

SECTION .0300 - TAX RATES 

.0303 LIQUID BASE RATE ILLUSTRATED 

(a) Whenever a dry mixture is converted to a liquid base, the tax per ounce of dry mixture will be 
computed in direct ratio to the quantity of ready-to-use liquid base produced. 

Note: Cocoa powder; generally, one pound of cocoa powder is used in the manufacture of a 
gallon of chocolate syrup. The tax on a gallon of syrup being one dollar ($1.00), and since 16 
ounces of powder are required to produce one gallon of syrup, the tax levied in this instance 
would be at the rate of six and one-fourth cents (6- %0) per ounce of the dry mixture. 

(b) Concentrated mixtures which are used commercially for compounding soft drink liquid base 
products are subject to tax in proportion to the concentrates. 

Note: Concentrate X is a quadruple strength syrup. This concentrate represents four gallons 
of ready-to-use syrup. In such instance, the tax rate on such concentrate would be four dollars 
($4.00) and would have to be tax paid accordingly by the distributor, wholesaler or retailer. 

(c) Premixed flavored milk shake drink mixes or premixed flavored imitation milk shake drink mixes 
which are not in ready-to-use size containers, and which milk shake drink mixes are for the purpose 
of further dispensing before being ready for consumption, are subject to tax based upon the amount 
of base product used in the manufacture of same. The fact that such products may be further chilled 
or partially frozen before being dispensed would not affect this liability. 

Approximately 10 percent of the premixed flavored milk shake drink mixes represents the amount of 
base product used in the manufacture of such premixed milk shake drink mix. Thus, a soft drink tax 
often cents ($0.10) will cover the excise tax due on the soft drink products used in the manufacture 
of one gallon of premixed flavored milk shake drink mix. On a five gallon container of premixed fla- 
vored milk shake drink mix, a soft drink tax of fifty cents ($0.50) would be applicable. A dealer is 
permitted to use this basis for payment of the tax on these premixed flavored milk shake drink mixes. 

(d) Premixed carbonated drinks, such as now manufactured and distributed, which are not in ready- 
to-use size containers, and which drinks are for the purpose of further dispensing before being ready for 
consumption, are not considered bottled soft drinks under the Soft Drink Tax Article. Instead, the tax 
on same shall be determined on the basis of the amount of liquid base product used in the manufacture 
of such premixed carbonated drinks. Proper tax shall be applicable to each such container based on 
the amount of liquid base product used in producing such drink. 

Using a five to one ratio, a liquid base product tax of seventeen cents ($0.17) will cover the amount 
of liquid base in one gallon of premixed carbonated drink. A dealer is permitted to use this basis for 
payment of the tax on these premixed carbonated drinks. Thus, on a five-gallon container of premixed 
drink, same would require a liquid base tax of eighty-five cents ($0.85). 



6:12 NORTH CAROLINA REGISTER September 16, 1991 740 



FINAL RULES 



Note: A 600-ounce container of premixed carbonated drink using this same five to one ratio, 
would represent approximately 100 ounces of syrup. On this basis, a tax of eighty cents ($0.80) 
would be applicable to each container of premixed carbonated drink. 

History Note: Statutory Authority G.S. 105-113.45; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; October 30, 1981. 

.0305 PRODUCTS USED BY MANUFACTURER 

(a) The excise tax levied on base products does not apply to base products used by persons in the 
manufacture of bottled soft drinks which are otherwise subject to tax. 

(b) All base products possessed or stored by the manufacturer which are not for use by such persons 
in the manufacture of bottled soft drinks shall be stored in a separate compartment or location from 
that known to be intended for use in the manufacture of bottled soft drinks. Adequate and complete 
records must be maintained to reflect the quantity of such products that are stored or kept within the 
separate compartment or location. The records must include quantity of ingredients purchased, date 
received, and the name and address of the person from whom they were received, date of withdrawal, 
user and the quantity withdrawn. All such records shall be made available to the Secretary of Revenue 
or an authorized agent at any time upon request for purpose of examination for at least three years. 

History Mote: Statutory Authority G.S. 105-113.45; 105-113.46; 
105-113.57; 105-113.58; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991. 

SECTION .0400 - TAXABLE STATUS OF VARIOUS PRODUCTS 

.0401 DOMESTIC USE VERSUS COMMERCIAL USE 

(a) For further clarification of the taxable status of soft drink products, the following explanation is 
given. 

(b) Bottled soft drinks are subject to tax both domestically and commercially. 

(c) Liquid (frozen or unfrozen) base products that contain milk or the package instructions indicate 
to add milk are exempt when used domestically but taxable commercially. 

(d) Liquid (frozen or unfrozen) base products that do not meet the exemption/registration require- 
ments under G.S. 105-113.46 and G.S. 105-113.47 are taxable both domestically and commercially. 

Note: Juice bases that do not contain 100 percent juice or do contain 100 percent juice when 
reconstituted according to package directions but are not registered as approved products. 

(e) Dry base products such as hot chocolate mix or other dry mixes which contain milk or milk is 
added, per package directions, are exempt domestically but taxable commercially. 

(f) Dry base products such as Tang, Country Time Lemonade, Gatorade, Kool-Aid, Oh Boy Drink, 
Tip-Top, Miracle Aid, all similar products and all dry mixes which do not contain milk or which the 
package directions do not indicate to add milk are taxable both domestically and commercially. 

(g) Base products that do not contain any milk are taxable both domestically and commercially. 

(h) Base products to which a liquid other than milk is added to make a soft drink are taxable both 
domestically and commercially. 

(i) Base products, even if classified as exempt for domestic use, that are purchased by a commercial 
establishment from a retail store immediately become taxable products and tax must be paid thereon. 
Note: Cocoa mix containing milk which is exempt domestically but taxable commercially. 

(j) Base products sold to commercial establishments such as drug stores, drive-ins, hospitals, restau- 
rants, vending machines, schools, churches, etc. are all subject to the soft drink excise tax. 

History Note: Statutory Authority G.S. 105-113.45; 105-113.46; 
105-113.47; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; October 30, 1981. 

SECTION .0500 - EXEMPTIONS FROM SOFT DRINK EXCISE TAX 

.0501 FEDERAL GOVERNMENT 



741 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



(a) Soft drink products may be sold to the federal government and its instrumentalities, such as the 
Armed Forces Exchange Services, without the payment of the soft drink excise tax, but sales of soft 
drink products by such services must be limited to members of the armed forces and their dependents 
who hold identification cards entitling them to make purchases through Armed Forces Exchange Ser- 
vices. 

(b) Whenever tax exempt deliveries of soft drink products are made by distributors, wholesalers or 
retailers to Armed Forces Exchange Services, the seller must require a duly receipted invoice or copy 
thereof from the governmental agent designated to accept delivery. 

(c) If a person engages in the sale of any soft drink products, defined under the Soft Drink Act, on 
a military reservation; regardless of the fact that he may have a contract with the federal government, 
whereby the federal government will receive a commission, flat fee or some other type of compensation 
on such sales; same does not exempt the sale of such products from the excise tax. In such instance, 
such sales would not be made by the federal government or an instrumentality thereof. Instead, all such 
sales are subject to the soft drink excise tax and shall be tax paid as required herein. 

History Note: Statutory Authority G.S. 105-113.46; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; October 30, 1981. 

.0505 APPLICATION FOR EXEMPTION REQUIRED 

(a) Registration of all natural juice and all bottled milk drinks, except a natural liquid milk drink 
produced by a farmer or a dairy, is required under G.S. 105-113.47. 

(1) Any bottled soft drink (juice or milk) for which exemption is claimed shall be registered with the 
secretary on Form B-B-8, Application for Registration of Product for Exemption from Bottled 
(Closed Container) Soft Drink Excise Tax. 

(2) Any concentrated fruit or vegetable juice for which exemption is claimed shall be registered with 
the Secretary on Form B-B-50, Application for Registration of Concentrated Frozen or Unfro- 
zen Fruit or Vegetable Juice for Exemption from the Soft Drink Excise Tax. 

(b) To register an item as exempt, the person who controls the brand name or formula of the item 
must fde the application for registration. 

(c) Three copies of the label which will be affixed to the product or sample of the physical package 
showing weight and content and supporting the claim for exemption must accompany each application. 

(d) Registration as an exempt item applies prospectively to sales of the registered bottled soft drink 
or registered juice concentrate made on or after the date of registration. Registration does not relieve 
a person of liability for taxes due on sales made before the date an item is registered. 

(e) All bottled soft drinks and base products for which exemption has not been provided under the 
Soft Drink Tax Act are subject to tax both commercially and domestically. 

History Note: Statutory Authority G.S. 105-113.47; 105-262; 
Eff. February 1, 1976; 
Amended Eff October 1, 1991; April 1, 1986. 

.0506 EXEMPT SALES RECORDS AND LNVENTORIES 

Proper records and separate inventories must be maintained on all soft drinks and base products 
purchased or designated for exemption transactions. These records and inventories must be maintained 
in such manner as can be inspected and audited by the Secretary or duly authorized representative at 
any time and without having to go through and separate or segregate all sales of the taxpayer in order 
to arrive at the amount of exempt sales or inventories. Every retail dealer and every distributor or 
wholesaler and their customers must keep records of inventories, purchases, and sales of bottled soft 
drink and base products for at least 3 years. 

History Note: Statutory Authority G.S. 105-113.51; 105-113.58; 105-262; 
Eff February 1, 1976; 
Amended Eff October I, 1991; October 30, 1981. 

.0507 EXEMPTION OF CONCENTRATED JUICES DETERMINED 

History Note: Statutory Authority G.S. 105-113.44; 105-113.47; 105-113.63; 
Eff. July I, 1984; 



6:12 NORTH CAROLINA REGISTER September 16, 1991 742 



FINAL RULES 



Amended Eff. April 1, 19S6; 
Repealed Eff October I, 1991. 

.0508 NATURAL PRODUCTS EXEMPTION DETERMENED 

(a) Natural liquid milk drink produced by a farmer or a dairy is exempt from the excise tax. Farmers 
and dairies are not required to register natural liquid milk. However, a milk drink produced other than 
by a farmer or dairy is subject to the tax unless exempted under G.S. 105-1 13.47. 

(b) A bottled soft drink, not already exempt under subdivision (1) of G.S. 105-113.46, that contains 
at least 35 percent natural milk measured by volume and has an approved registration under G.S. 
105-1 13.47 is exempt from the excise tax. 

(c) Natural juice (bottled, concentrated, reconstituted) that has an approved registration under G.S. 
105-1 13.47 is exempt from the excise tax. 

(1) A bottled soft drink that contains 100 percent juice, with or without added vitamins. 

(2) A concentrate (100 percent juice dehydrated), with or without added vitamins. 

(3) A reconstituted 100 percent juice (100 percent juice liquid which results from adding water, ac- 
cording to package directions, to a dehydrated 100 percent juice), with or without added 
vitamins. 

(d) Except for added vitamins, the addition of any other ingredients (such as sugar, salt, coloring, 
artificial flavoring, preservative, carbonation, etc.) to a bottled, concentrated or reconstituted juice 
makes the product a taxable item. 

History Note: Statutory Authority G.S. J 05- 113.46; 105-113.47; 105-262; 
Eff. October 1, 1991. 

.0509 DESIGNATION OF EXEMPT SALES 

(a) Bottled soft drinks or base products designated as tax exempt must be sold in tax exempt trans- 
actions. 

(b) No distributor, wholesaler or customer of a distributor or wholesaler may delay payment of the 
tax due on bottled soft drinks or base products by failing to pay tax on a sale that is not designated or 
by overstating the quantity of soft drink products that will be sold in an exempt transaction. 

(c) A distributor or wholesale dealer may sell nontaxpaid bottled soft drinks or base products to a 
customer who has tax exempt sales provided the customer has notified the distributor or wholesale 
dealer in writing that the customer intends to resell the items in exempt transactions. Where prior 
written notification is not provided, the distributor or wholesale dealer must remit applicable tax. 

(d) The distributor or wholesale dealer must separately invoice and indicate the soft drinks or base 
products designated for exempt transactions. 

Note: Sales designated for customers with soft drink product sales outside North Carolina must 

be invoiced to read, "Designated for Sale Outside North Carolina". 
(e) The distributor or wholesaler selling the designated soft drink products must provide this Depart- 
ment, as part of their monthly soft drink excise tax report, a schedule (Form B-B-60, Schedule I) 
showing full information on the designated sale; i.e., name and address of the customer, invoice number 
and date, and quantity of bottled soft drinks or base products sold to the person for resale in the exempt 
transactions. 

(f) The distributor or wholesale dealer who relies on the prior written exempt intent of its customer 
is not required to pay tax on the designated sales when filing a monthly report. However, the distrib- 
utor or wholesaler must pay the tax due on all other taxable sales. 

(g) The tax liability plus penalties and interest will be held against the distributor's or wholesaler's 
customer who sells soft drink products designated exempt in a taxable transaction. Customers violating 
designation procedures should anticipate full penalties to be held on designated products improperly 
handled and are not entitled to the reduced tax rate or discount. 

History Note: Statutory Authority G.S. 105-113.51; 105-262; 
Eff October 1, 1991. 

SECTION .0600 - TAXPAID STAMP (DECAL AND IMPREST) 
AND CROWN METHODS OF REMITTANCE 

.0602 TAXPAID STAMPS 
.0603 TAXPAID CROWNS 



743 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



.0604 AFFIXING OF CROWNS AND STAMPS 
.0605 TAXPAID IMPREST STAMP 
.0606 PROMPT MAIL SERVICE 

History Note: Statutory Authority G.S. 105-113.44; 105-113.51; 
105-113.52; 105-113.54; 105-113.63; 
Eff. February 1, 1976; 
Amended Eff. October 30, 1981; 
Repealed Eff October 1, 1991. 

.0608 CONTROL OF TAX EXEMPT TRANSACTIONS 

History Note: Statutory Authority G.S. 105-113.45; 105-113.48; 105-113.57; 105-113.63; 105-113.66; 
Eff. February 1, 1976; 

Amended Eff . October 30, 1981; June 11, 1977; 
Repealed Eff. October 1, 1991. 

.0610 ONLY NORTH CAROLCNA TAXPAID LNDICIA ALLOWED 

No bottled soft drinks, or base products shall be sold in this State evidencing another state's taxpaid 
stamp, crown or other taxpaid indicia. 

History Note: Statutory Authority G.S. 105-/13.51; 105-262; 
Eff July 1, 1984; 
Amended Eff. October 1, 1991. 

SECTION .0700 ALTERNATE METHOD OF PAYMENT ON BOTTLED 
(CLOSED CONTALNER) SOFT DRrNKS 

.0701 APPLICABLE TO BOTTLED DRLNKS 
.0702 LIABILrTY REQUIREMENT 

History Note: Statutory Authority G.S. 105-113.51; 1-5-1 13.56A; 105-113.63; 
Eff. February 1, 1976; 
Amended Eff June 11, 1977; 
Repealed Eff October 1, 1991. 

.0706 REDUCED RATE UNDER ALTERNATE METHOD 

.0707 METHOD REQUIRED ON rWOICE 

.0708 REPORTENG SYSTEM PROVIDED DISTRIBUTORS 

History Note: Statutory Authority G.S. 105-1 13.56A; 105-113.63; 
Eff. February 1, 1976; 

Amended Eff. October 30, 1981; June 11, 1977; 
Repealed Eff October 1, 1991. 

.0710 NO RETAILER QUALIFIES 
.0711 BOND REQUIREMENT 

History Note: Statutory Authority G.S. 105-1 13.56A; 105-113.63; 
Eff. February 1, 1976; 
Repealed Eff October 1, 1991. 

SECTION .0800 - OPTIONAL METHOD FOR PAYMENT OF 
SOFT DRLNK EXCISE TAX 

.0801 NOTIFICATION REQUIREMENT OF METHOD ELECTED 
.0802 PROCEDURE FOR OPTIONAL METHODS 
.0803 NO DISCOUNT ALLOWED 



6:12 NORTH CAROLINA REGISTER September 16, 1991 744 



FINAL RULES 



History Note: Statutory Authority G.S. 105-1 13.56B; 105-113.63; 
Eff. February 1, 1976; 
Amended Eff. October 30, 1981; 
Repealed Eff. October 1, 1991. 

.0805 CONTROL OF TAX EXEMPT TRANSACTIONS 
.0806 CONTINUOUS USE OF METHOD 

History Sole: Statutory Authority G.S. 105-113.45; 105-113.48; 
105-1 13.56B; 105-113.57; 105-113.63; I05-113-.66; 
Eff. February 1, 1976; 
Amended Eff June 11, 1977; 
Repealed Eff October 1, 1991. 

.0808 BOND REQUIREMENT 

History Note: Statutory Authority G.S. 105-1 13.56B; 105-113.63; 
Eff. February 1, 1976; 
Amended Eff. October 30, 1981; 
Repealed Eff October 1, 1991. 

SECTION .0900 - MONTHLY REPORTS 

.0901 REPORT BY DISTRIBUTOR OR WHOLESALER 

(a) Distributors and wholesalers, liable for the tax under G.S. 105-113.51, must file monthly reports 
on Form B-B-60 (Monthly Soft Drink Excise Tax Report of Distributor or Wholesale Dealer) with the 
Secretary, showing transactions for the preceding month. This monthly report is required whether or 
not any tax is shown to be due. The secretary will provide monthly report forms which must be filled 
out in detail, and any remittance due must accompany these reports. 

(b) Distributors and wholesalers, liable for the tax under G.S. 105-113.51, are subject to the tax at 
the reduced rate of seventy-two cents ($0.72) per gross, instead of one dollar and forty-four cents ($1.44) 
per gross, on the first 15,000 gross of bottled soft drinks sold at wholesale from October 1 to September 
30 of each year. This equates to a reduced rate of one-half cent (1/20) per bottled soft drink on the first 
2,160,000 drinks sold annually. 

(c) A wholesale sale is a sale made by a distributor or wholesale for resale and does not include a sale 
to the user or ultimate consumer. 

(d) No discount is allowed on wholesale sales of bottled soft drinks tax paid at the reduced rate of 
one-half cent (1/20) per bottle. 

History Note: Statutory Authority G.S. 105-113.51; 105-113.52; 105-262; 
Eff. February 1, 1976; 
Amended Eff October 1, 1991; October 30, 1981. 

.0902 REPORT BY RETAILER 

Retail dealers, liable for the excise tax under G.S. 105-113.51, shall file monthly reports on Form 
B-B-61 (Retail Dealer's Monthly Soft Drink Excise Tax Report) covering such transactions. This re- 
port is required whether or not any tax is shown to be due. The Secretary will provide monthly reports 
forms which must be filled out in detail, and any remittance due must accompany these reports. 

History Note: Statutory Authority G.S. 105-113.51; 105-262; 
Eff February 1, 1976; 
Amended Eff October 1, 1991. 

.0903 REPORT BY DEALER ON TRALNS 

Railroads operating interstate are permitted to sell nontaxpaid bottled soft drinks in this State, but 
such carriers must notify the Secretary and report on Form B-B-15 (Monthly Report of Sales of 
Nontaxpaid Bottled Soft Drinks by Dealers on Trains). This report is due on or before the 15th day 
of each month showing all taxable sales for the preceding month. A remittance for the amount of the 
excise tax due the state on such sales must be submitted with the report. 



745 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



History Note: Statutory Authority G.S. 105-113.51; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991. 

.0904 REPORT BY CROWN MANUFACTURERS 
.0905 REPORT BY IMPRINT MANUFACTURERS 

History Note: Statutory Authority G.S. 105-113.52; 105-113.54; 105-113.63; 
Eff. February 1, 1976; 
Repealed Eff October 1, 1991. 

.0907 DISCOUNT FOR TIMELY FILING AND PAYMENT 

(a) Distributors and wholesale dealers liable for the soft drink excise tax under G.S. 105-113.51 and 
who file timely reports may deduct a four percent discount from taxes due on: 

(1) bottled soft drinks sold at retail. 

(2) bottled soft drinks sold in excess of the first 15,000 gross (2,160,000 bottles) sold at wholesale 
from October 1 to September 30 of each year. This discount does not apply to bottled soft 
drinks tax due under the 15,000 gross reduced rate [one-half cent (l/2£ per bottle)] on wholesale 
sales. 

(3) wholesale or retail sales of base products. 

(b) Retail dealers liable for the soft drink excise tax under G.S. 105-1 13.51 and who file timely reports 
may deduct a 4 percent discount from total taxes due on retail sales of bottled soft drinks and base 
products for the month. Retail dealers are not required to be licensed or make monthly reports when 
they purchase only taxpaid soft drink products. 

(c) Failure to file a timely report with tax due for the month will result in the Department of Revenue 
disallowing the four percent discount for timely payment and adding General Statute penalties and in- 
terest for late filing/failure to pay when due. 

History Note: Statutory Authority G.S. 105-/13.51; 105-113.52; 105-262; 
Eff. October I, 1991. 

.0908 LNVOICLNG REQUIREMENTS 

(a) All sales invoices of distributors and wholesalers, whether resident or nonresident, shall indicate 
payment of the North Carolina soft drink excise tax by setting the tax out as a separate line item on 
the invoice. 

(b) All sales invoices of nonresident distributors or wholesalers shall show the point of origin and 
mode of transportation for all shipments of bottled soft drinks or base products into this State. 

History Note: Statutory Authority G.S. 105-113.51; 105-113.58; 105-262; 
Eff. October J, 1991. 

.0909 BOND REQUIREMENTS 

(a) The Secretary may require a distributor, wholesale dealer or retail dealer to furnish a bond (Form 
B-B-13) in an amount that adequately protects the State from loss if the distributor or dealer fails to 
pay taxes due under the Soft Drink Tax Act. A bond shall be conditioned on compliance with this 
Article, shall be payable to the State, and shall be in the form required by the Secretary. The Secretary 
shall proportion a bond amount to the anticipated tax liability of the distributor or dealer. The Sec- 
retary shall periodically review the sufficiency of bonds required and shall increase or decrease the 
amount that is adequate to protect the State from loss. 

(b) Also, the Secretary of State may be required to be appointed lawful attorney in fact (Form 
B-B-43) by out-of-state distributors, wholesale dealers or retail dealers with no located place of business 
in this State. 

History Note: Statutory Authority G.S. 105-/13.51; 105-113.53; 105-262; 
Eff October I, 1991. 

SECTION .1000 - LIABILITY FOR AND PAYMENT OF THE SOFT DRINK EXCISE TAX 



6:12 NORTH CAROLINA REGISTER September 16, 1991 746 



FINAL RULES 



.1001 PRIMARY LIABILITY 

(a) The distributor or retail dealer who first manufactures and distributes the soft drink products in 
this State is liable for payment of the soft drink excise tax. 

(b) The distributor, wholesale dealer or retail dealer who brings soft drink products into this State is 
liable for the payment of the excise tax. 

(1) The out-of-state distributor, wholesale dealer or retail dealer who brings such products into the 
State on its own truck. 

(2) The in-state distributor, wholesale dealer or retail dealer who brings such products into the State 
on its own truck. 

(3) The distributor, wholesale dealer or retail dealer who first receives or handles the soft drink 
products in this State. 

(A) The distributor, wholesale dealer or retail dealer who is the original consignee of any soft drink 
products manufactured or produced outside this State. 

(B) The in-state distributor, wholesale dealer or retail dealer who first receive such products from 
outside the State by common carrier or contract carrier. 

History Note: Statutory Authority G.S. 105-113.51; 105-262; 
Eff. October 1, 1991. 

.1002 SECONDARY LIABILITY 

(a) When any nontaxpaid soft drink product is found in possession of any retail dealer, the distributor 
or wholesale dealer selling such items within this State shall be subject to the penalties provided under 
the General Statutes of the North Carolina Revenue Laws. 

(b) A retail dealer who acquires nontaxpaid bottled soft drinks or nontaxpaid base products from a 
distributor or a wholesale dealer is secondarily liable for any tax due on the bottled soft drink or base 
products and may not deduct a discount from the amount of tax due when reporting the tax. 

History Note: Statutory Authority G.S. 105-113.51; 105-262; 
Eff October 1, 1991. 

SLBCHAPTER 4F - EXCISE STAMP TAX ON CONVEYANCES 

.0005 CONVEYANCE TAX (EXCISE TAX ON DEEDS) REPORT 

The county finance officer shall file Form R- 1 [Conveyance Tax (Excise Tax on Deeds) Report] on 
or before the 20th day of each month with remittance covering one-half of the net proceeds received 
from the conveyance tax for the preceding month. 

History Note: Statutory Authority G.S. 105-228.30; 105-262; 
Eff October 1, 1991. 

CHAPTER 6 - LNDrvTDL AL LNCOME TAX DIVISION 

SLBCHAPTER 6B - LNDFVIDUAL LNCOME TAX 

SECTION .0100 - FILLNG LNDD IDEAL LNCOME TAX RETURNS 

.0101 FORMS 

The individual income tax returns, Form D-400 or Form D-400EZ, are available from the Depart- 
ment of Revenue. Additional schedules prescribed by the Secretary of Revenue and instructions are 
available also. 

History Note: Statutory Authority G.S. 105-155; 105-262; 
Eff. February 1, 1976; 
Amended Eff October 1, 1991. 

.0104 ITEMS REQUIRES G SPECIAL ATTENTION 

The individual taxpayer or his agent should give special attention to the following items when pre- 
paring an individual income tax return: 
(1) The Form D-400 or D-400EZ for the proper year should be used. 



747 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



Note: A 1991 form for a taxpayer whose calendar year ends December 31, 1991 and a 1990 form 
for a fiscal year taxpayer whose fiscal year begins in 1990. Form D-400 must be used to file a fiscal 
year return. 

(2) The name and current address of the taxpayer should be plainly printed. The first name, middle 
initial and last name should be printed or typed. When a preaddressed form is used, any error in 
the name or address should be corrected. 

(3) When filing an income tax return for an unmarried individual who died during the taxable year, 
write "Deceased" after the individual's name on the return followed with the name and address 
of the executor or administrator. 

Note: John Doe (Deceased), Richard Doe, Executor; 100 Oak Street, Anywhere, North Carolina, 
27000. 

(4) When filing a separate return of a decedent who was married at the time of death, write "De- 
ceased" after the name and enter the name and address of the surviving spouse. The first two 
hundred dollars ($200.00) of any refund due on the return must be paid to the surviving spouse. 
If the refund is more than two hundred dollars ($200.00), the first two hundred dollars ($200.00) 
plus one-half of the remainder must be paid to the surviving spouse. The remaining refund is paid 
to the estate; therefore, the name and address of the administrator or executor must also be shown 
on the return. The refund due on a return of a surviving spouse filing a joint return with the de- 
ceased will be made to the surviving spouse. 

(5) The North Carolina law requires the taxpayer to furnish his social security number with the re- 
turn. This number is necessary to verify the identity of the taxpayer, since the Department uses 
an accounting system and equipment which identifies taxpayers and credits returns and payments 
by social security number. Separate returns of spouses are often interrelated whether they are 
living together or apart; therefore, the taxpayer is asked to furnish the name and social security 
number of his spouse. This information can save time, correspondence, and difficulty for the 
taxpayer and the Department. 

(6) The same filing status checked on the Federal income tax return should also be checked on the 
North Carolina income tax return (Federal Form 1040EZ filers should check single). However, 
if either the taxpayer or the taxpayer's spouse in a nonresident and had no North Carolina Taxable 
income for the taxable year, the filing status MARRIED FILING SEPARATELY should be 
checked. 

(7) The name and address of your last employer should always be entered. 

(8) Each applicable line on page one of the tax return must be completed and the entering of words 
or phrases, such as "unconstitutional" or "object - self mcrimination" does not meet the require- 
ment of completing each applicable line on the return. 

(9) The tax must be computed accurately, and in the case of a delinquent return, the penalty and 
interest prescribed by statute should be added. 

(10) If an individual has moved into or out of North Carolina during the tax year or is a nonresident 
with income from sources within North Carolina, the section on page 2 of Form D-400, Compu- 
tation of North Carolina Taxable Income for Part- Year Residents and Nonresidents must be 
completed. Credit for tax paid to another state is not allowed to an individual moving into or out 
of this state unless he has income derived from and taxed by another state or country while he is 
a resident of this state, (see Credit for Income Tax Paid to Another State or Country 17 NCAC 
6B .0607) 

(11) If a tax credit is claimed, there must be attached to the return a true copy of the return filed with 
the other state or country and a canceled check, receipt, or other proof of payment of tax to the 
other state or country. 

(12) Every return must be signed by the taxpayer or his or her authorized agent, and joint returns 
must be signed by both spouses. If husband and wife use different last names on a joint return, 
there will be a delay in processing any refund that may be due. A refund may be delayed by an 
unsigned return. 

(13) Where tax has been withheld, the state copy of the Wage and Tax Statement must be attached 
to the return. 

(14) Any additional information that will assist in the processing and auditing of a return should be 
indicated on the return or a worksheet or schedule attached to the return. 

(15) Anyone who is paid to prepare a return must sign the return in the space provided. When more 
than one person prepares a return, the preparer with primary responsibility for the overall accuracy 
of the return must sign as the preparer. The signature must be by hand. Stamps and labels are 
not acceptable. 



6:12 NORTH CAROLINA REGISTER September 16, 1991 748 



FINAL RULES 



History Note: Statutory Authority G.S. 2SA-15-8; 105-151; 105-152; 105-154; 105-155; 
105-163.5(e); 105-163.7; 105-163.10; 105-251; 105-252; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; June 1, 1990; August 1, 1986; May 1, 1984. 

.0107 EXTENSIONS 

(a) If an income tax return cannot be filed by the due date, an individual may apply for an automatic 
four-month extension of time to file the return. To receive the extension, an individual must file Form 
D-410, Application for Automatic Extension of Time to File State Income Tax Returns, and pay the 
full amount of tax he expects to owe by the original due date of the return. In lieu of filing Form 
D-410, an automatic four-month extension of time to file a North Carolina income tax return will be 
granted if an individual files Federal Form 4868, Application for Automatic Extension of Time, with 
the Internal Revenue Service, provided he submits a copy of the completed Form 4868 and full pay- 
ment of the tax by the original due date of the return. When filing a copy of the Form 4868 in lieu 
of Form D-410, an individual must clearly state that the form is for North Carolina; mark through the 
federal amounts shown on the form; enter the applicable amounts for North Carolina; and pay the tax 
due. 

(b) A ten percent late payment penalty will apply on the remaining balance due if the tax paid by the 
due date of the return is less than 90 percent of the total amount of tax due. If the 90 percent rule is 
met, any remaining balance due, including interest, must be paid with the income tax return before the 
expiration of the extension period to avoid the late payment penalty. 

(c) An individual can apply for an additional extension beyond the automatic four-month extension 
by filing Form D-410A, Application for Additional Extension of Time to File State Income Tax Re- 
turns, in duplicate. Extensions of time beyond the automatic four-month extension of time to file are 
granted only for very 7 good reasons. In lieu of filing Form D-410A, an additional extension of time 
will be granted if an individual files Federal Form 2688 with the Internal Revenue Service and includes 
a copy of the approved Form 2688 with his North Carolina return. 

(d) A return may be filed at any time within the extension period but it must be filed before the end 
of the extension period to avoid the late filing penalty. 

(e) This Rule applies to taxable years beginning on or after January 1, 1990. 

History Note: Statutory Authority G.S. 105-155; 105-157; 105-236(4); 105-160.6; 105-160.7; 
105-262; 105-263; 
Eff. February 1, 1976; 
Amended Eff October 1, 1991; February 1, 1991; June 1, 1990; May 1, 1984. 

.0110 LNDE\ IDEALS REQUIRED TO FILE A N.C. LNDD IDEAL LNCOME TAX RETURN 

The following individuals are required to file a North Carolina individual income tax return: 

(1) Every resident of North Carolina whose income for the taxable years equals or exceeds the 
amount for his filing status shown in Rule .0111 of this Subchapter. 

(2) Every part-year resident who received income while a resident of North Carolina or who received 
income while a nonresident attributable to the ownership of any interest in real or tangible personal 
property in North Carolina or derived from a business, trade, profession, or occupation carried on 
in North Carolina and whose total income for the taxable year equals or exceeds the amount for 
his filing status shown in Rule .0111 of this Subchapter. 

(3) Every nonresident who received income for the taxable year from North Carolina sources that 
was attributable to the ownership of any interest in real or tangible personal property in North 
Carolina or derived from a business, trade, profession, or occupation carried on in North Carolina 
and whose total income for the taxable year equals or exceeds the amount for his filing status 
shown in Rule .0111 of this Subchapter. 

History Note: Statutory Authority G.S. 105-152; 105-262; 
Eff. June 1. 1990; 
Amended Eff. October 1, 1991. 

.0114 COMPUTATION OF TAXABLE LNCOME - GENERAL 

The starting point in determining North Carolina taxable income is taxable income for Federal income 
tax purposes, subject to the following additions, deductions and transitional adjustments which are re- 



749 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



quired because of differences in the way State and Federal law treated certain tax transactions prior to 
January 1, 1989. These adjustments do not apply to all individuals; however, each individual should 
determine if any of the adjustments apply to his return. 

History Note: Statutory Authority G.S. 105-134.1; 105-/34.5; 105-134.6; 105-134.7; 
Eff. June 1, 1990; 
Amended Eff. October 1, 1991. 

.01 15 ADDITIONS TO FEDERAL TAXABLE INCOME 

(a) Federal taxable income must be increased by the following additions to the extent the amounts 
are not included in Federal gross income: 

( 1 ) Interest received upon obligations of states other than North Carolina and their political subd- 
ivisions; 

(This addition includes that portion of an exempt interest dividend from a regulated investment 
company (mutual fund) that represents interest on direct obligations of states and their political 
subdivisions other than North Carolina. See 17 NCAC 6B .4100 for additional information on 
regulated investment companies.) 

(2) Any amount allowed as a deduction from gross income that is taxed by a separate tax under the 
Internal Revenue Code. This would include lump-sum distributions from certain employee's 
retirement plans which a taxpayer may elect to exclude from taxable income in the regular tax 
computation and compute the tax separately using the favorable ten-year and five-year forward 
averaging rules; 

(3) State, local, and foreign income taxes deducted on the Federal return; 

(4) The Federal standard deduction inflation adjustments for taxable years beginning after 1988 and 
the Federal personal exemption inflation adjustments for taxable years beginning after 1989. 
These adjustments are necessary because the Federal standard deduction amounts and personal 
exemption amounts will be adjusted each year, if necessary, for inflation; 

(5) The fair market value not to exceed [one hundred thousand dollars ($100,000)] of real property 
donated for conservation purposes and/or the market price of donated gleaned crops for which 
an individual income tax credit(s) was claimed on the North Carolina individual income tax re- 
turn. 

(b) The standard deduction for North Carolina purposes is shown in the schedules in this Paragraph: 

SCHEDULE A 

Individuals who are not claimed as dependents by another taxpayer 

FILING STATUS STANDARD 

DEDUCTION 

Single $ 3,000 

65 or older or blind 3,750 

65 or older and blind 4,500 

Married Filing Jointly/ Qualifying Widow(er) 5,000 

One Spouse 65 or older or blind 5,600 

One Spouse 65 or older and blind 6,200 

Both spouses 65 or older or blind 6,200 

Both spouses 65 or older and blind 7,400 

*Married Filing Separately 2,500 

65 or older or blind 3,100 

65 or older and blind 3,700 

Head of Household 4,400 

65 or older or blind 5,150 

65 or older and blind 5,900 

SCHEDULE B 

Individuals who can be claimed as dependents by another taxpayer who have earned income of 

$500.00 or less 

FILING STATUS STANDARD 

DEDUCTION 



6:12 NORTH CAROLINA REGISTER September 16, 1991 750 



FINAL RULES 



Single 

Under 65 and not blind $ 0,500 

65 or older or blind 1,250 

65 or older and blind 2,000 

♦Married Filing Separately 

Under 65 and not blind 0,500 

65 or older or blind 1,100 

65 or older and blind 1,700 

SCHEDULE C 

Individuals who can be claimed as dependents by another taxpayer and have earned income of 

$500.00 or more 



STANDARD DEDUCTION 



FILING STATUS 

Single 

Under 65 and not blind 

65 or older or blind 


AMT OF 

EARNED 

INCOME 

$ 

$ 


ADDITIONAL 
ALLOWANCES 

+ $ -0- 
+ $ 750 
+ $1,500 

+ $ -0- 
+ $ 600 
+ $1,200 


LIMITED 
TO 

$3,000 
$3,750 


65 or older and blind 


$ 


$4,500 


♦Married Filing Separately 

Under 65 and not blind 


$ 


$2,500 


65 or older or blind 


$ 


$3,100 


65 or older and blind 


$ 


$3,700 



♦The standard deduction is zero for a married individual filing separately whose spouse claims itemized 
deductions. 

(c) The standard deduction for nonresident aliens and individuals filing a short-year return due to a 
change of accounting period is zero. 

History Sole: Statutory Authority G.S. 105-134.6(c); 105-262; 
Eff June 1, 1990; 
Amended Eff. October 1, 1991. 

.0116 DEDUCTIONS FROM FEDERAL TAXABLE INCOME 

Federal taxable income must be decreased by the following deductions to the extent the amounts are 
included in Federal gross income: 

(1) Interest upon direct obligations of the United States or its possessions; Interest earned on obli- 
gations that are merely backed or guaranteed by the United States Government will not qualify for 
deduction from an individual's income. The deduction from income will not apply to distributions 
which represent gain from the sale or other disposition of the securities, nor to interest paid in 
connection with repurchase agreements issued by banks and savings and loan associations. 

(2) Interest on bonds, notes, and other obligations of the State of North Carolina or any of its pol- 
itical subdivisions; 

(3) Interest on obligations and gain from the sale or disposition of obligations if North Carolina law 
under which the obligations were issued specifically exempts the interest or gain; 

(4) Social Security benefits received under Title II of the Social Security Act and Railroad Retirement 
benefits received under the Railroad Retirement Act of 1937; 

(5) Refunds of State, local, and foreign income taxes; 

(6) Up to four thousand dollars ($4,000) in retirement benefits from one or more Federal, state, or 
local government retirement plans; 

(7) Up to two thousand dollars ($2,000) in retirement benefits from one or more private retirement 
plans; 

(a) If an individual receives Federal, state, or local government retirement benefits and also receives 
other qualified retirement benefits, the total deduction is limited to four thousand dollars 
($4,000). For married couples filing a joint return, the maximum dollar amount of retirement 



751 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



benefits that may be deducted from Federal taxable income applies separately to the benefits 
received by each spouse, so that the maximum deduction on a joint return is eight thousand 
dollars ($8,000). 

(b) If an individual received retirement benefits during the year from one or more private retirement 
plans other than state, local, or Federal government retirement plans, he may deduct the amount 
received or two thousand dollars ($2,000), whichever is less. Married individuals filing a joint 
return where both received such retirement benefits may each deduct up to two thousand dollars 
($2,000) for a potential total deduction of four thousand dollars ($4,000). 

(c) "Retirement benefits" are amounts paid to a former employee or to a beneficiary of a former 
employee under a written retirement plan established by the employer to provide payments to 
an employee or beneficiary after the end of the employee's employment with the employer where 
the right to receive the payment is based upon the employment relationship. For self-employed 
individuals, retirement benefits are amounts paid to an individual, or beneficiary under a written 
retirement plan established by the individual to provide payments after the end of self- 
employment. Retirement benefits also include amounts received from an individual retirement 
account or from an individual retirement annuity (IRA), both of which are described in Section 
408 of the Internal Revenue Code. An individual is not required to have ceased employment 
to qualify for the two thousand dollar ($2,000) deduction for distributions from an individual 
retirement account or an individual retirement annuity. 

(d) The deduction for retirement benefits is allowed only to the extent the benefits are included in 
federal gross income. If an individual elects to roll-over the distribution from his employer's 
plan or from his individual retirement account, no deduction is allowed since the amount rolled 
over is not included in gross income. 

(e) A change in the structure of a corporate employer which causes a distribution to be paid to the 
employee from the employer's retirement plan does not entitle the employee to claim the de- 
duction for retirement benefits from such distribution. For example, Company A is merged 
with Company B. An employee of A continues to work for the merged company. During 1989, 
the employee received a distribution of five thousand dollars ($5,000) representing his total credit 
in the non-contributory retirement plan of Company A. The employee would not be entitled 
to the two thousand dollar ($2,000) deduction since he had not ceased employment. 

(f) Since short-term disability benefits from the Disability Income Plan of North Carolina adminis- 
tered for the benefit of North Carolina teachers and State employees are not paid to a former 
employee under a retirement plan after the end of the employee's employment, the benefits are 
not subject to the four thousand dollar ($4,000) deduction from Federal taxable income. 
Long-term disability benefits are payable after the conclusion of the short-term disability period 
or after salary continuation payments cease, whichever is later. Recipients of long-term disa- 
bility benefits under the Disability Income Plan of North Carolina are former employees and 
they are entitled to the four thousand dollar ($4,000) deduction from Federal taxable income. 

(g) Benefits paid to Federal civil service employees who become disabled prior to becoming age 60 
upon separation from service are paid to a former employee under a retirement plan after the 
end of the employee's employment and are subject to the four thousand dollar ($4,000) de- 
duction from Federal taxable income. 

(h) Survivors of a member of the armed forces who receive benefits from the Retired Serviceman's 
Family Protection Plan or the Survivor's Benefits Plan as the result of taking a reduction in re- 
tirement pay are subject to the deduction of up to four thousand dollars ($4,000) from Federal 
taxable income; 

(8) The amount of North Carolina inheritance tax paid that is attributable to an item of income in 
respect of a decedent. 

The deduction from Federal taxable income is determined by multiplying the amount of North 
Carolina inheritance tax paid on all property transferred to the particular beneficiary, less the North 
Carolina inheritance tax paid if the item of income in respect of a decedent had not been included, 
by a fraction, the numerator of which is the income in respect of a decedent the beneficiary in- 
cluded in Federal gross income, as adjusted, and the denominator of which is the total income in 
respect of a decedent transferred to the beneficiary; 

(9) Income earned by an enrolled member of the Eastern Band of Cherokee Indians or other feder- 
ally recognized tribes if such income is derived from activities on the Cherokee reservation while 
the member resided on the reservation. 



6:12 NORTH CAROLINA REGISTER September 16, 1991 752 



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(10) An amount by which any federal income tax deduction is disallowed because of the allowance 
of a federal income tax credit for part of all of the expense comprising the deduction to the extend 
that a similar State income tax credit is not allowed. 

EXAMPLE: If an individual itemizes his deductions and claims the mortgage interest tax credit 
on his federal tax return because of participating in the mortgage credit certificate program (MCC), 
he may reduce his North Carolina taxable income by the amount the mortgage interest deduction 
was reduced due to claiming the mortgage interest credit on the federal tax return. 
EXAMPLE: If an individual qualified and elected to claim the federal earned income tax credit 
for a portion of his health insurance premiums in lieu of claiming them as a medical expensed 
deduction, he is entitled to a deduction for the amount of the credit, provided he itemized his de- 
ductions of his federal return and the net medical expenses on Federal Schedule A are greater than 
zero. Self-employed individuals who do not itemize and/or have no net medical expenses on 
Federal Schedule A may claim a deduction for 25 percent of the amount of the credit. 

History Mote: Statutory Authority G.S. 1 05- 134.6(b); 105-262; 
Eff. June 1, 1990; 
Amended Eff. October 1, 1991; April 1, 1991. 

.0117 TRANSITIONAL ADJUSTMENTS 

The following transitional adjustments are required because of differences in the way State and Federal 
law treated certain tax transactions prior to January 1, 1989. 

(1) Amounts that were included in the basis of property under Federal law but not under State law 
prior to January 1, 1989, must be added to taxable income in the year of disposition of the prop- 
erty. These adjustments include the increase in basis for Federal gift tax paid on property received 
as a gift and in certain cases where the individual was permitted under Federal law to capitalize 
certain expenditures for interest and taxes. 

(2) Amounts that were included in the basis of property under State law but not under Federal law 
prior to January 1, 1989, must be deducted from an individual's taxable income in the year of 
disposition of the property. Deductions of this type include the increase in basis for State gift tax 
paid on property received as a gift and certain business expenditures that an individual elected to 
expense under Section 179 of the Internal Revenue Code but which were required to be capitalized 
for State income tax purposes. 

(3) A loss or deduction that was incurred or paid and deducted in full for North Carolina income tax 
purposes under prior State law in a taxable year beginning before January 1, 1989, but was carried 
forward and deducted from Federal taxable income in a taxable year beginning on or after January 
1, 1989, must be added to taxable income. 

EXAMPLE: The full amount of a capital loss incurred in 1988 would have been deductible on 
an individual's 1988 State income tax return but on his Federal income tax return the amount of 
the deductible loss would have been limited to his capital gains plus three thousand dollars ($3,000) 
|one thousand five hundred dollars ($1,500) if married and filing a separate return]. Any remaining 
loss could be carried forward to subsequent tax years and deducted on his Federal income tax re- 
turn in computing his Federal taxable income. In this instance, the individual must add back each 
year that portion of the 1988 loss deducted from his Federal taxable income in arriving at the 
amount of his North Carolina taxable income. In determining the amount of a capital loss to add 
back, short-term capital losses from taxable years beginning prior to January 1, 1989, must be 
applied before applying short-term capital losses incurred in taxable years beginning on or after 
January 1, 1989, and before applying long-term capital losses from any year. Long-term capital 
losses from taxable years beginning prior to January 1, 1989, must be applied before applying 
long-term capital losses incurred in taxable years beginning on or after January 1, 1989. 
EXAMPLE: An individual carries over six thousand dollars ($6,000) of capital losses from years 
beginning prior to January 1, 1989, consisting of four thousand ($4,000) of short-term losses and 
two thousand dollars ($2,000) of long-term losses. In 1989, the individual incurs additional capital 
losses of two thousand five hundred dollars ($2,500), consisting of one thousand five hundred 
($1,500) of short-term losses and one thousand dollars ($1,000) of long-term losses. The individual 
claims a capital loss deduction of three thousand dollars ($3,000) on his federal income tax return. 
In 1990 and 1991 the individual has no additional capital gains or losses and claims a three thou- 
sand dollars ($3,000) capital loss carry-over on his 1990 federal income tax return and the balance 
of two thousand five hundred dollars ($2,500) capital loss carry-over on his 1991 federal income 
tax return. The taxpayer would be required to all back the following amounts as transitional ad- 



753 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



justments: 1989 - three thousand dollars ($3,000) (a portion of the short-term capital loss from 
1988); 1990 - one thousand five hundred dollars ($1,500) consisting of the one thousand dollars 
($1,000) balance of the 1988 short-term loss and five hundred dollars ($500) of the 1988 long-term 
loss; 1991 - one thousand five hundred dollars ($1,500) consisting of the remaining 1988 long-term 
loss carry-over. 

EXAMPLE: Prior State law required charitable contributions to be deducted in the year they 
were paid and did not permit any amount to be carried over to another tax year. Under Federal 
law, an individual who may not be entitled to deduct the full amount of certain contributions be- 
cause of an adjusted gross income limitation may carry over the unused portion to the succeeding 
tax year. In this situation, the individual must add back to Federal taxable income the contrib- 
utions carry-over from 1988 if he itemized deductions on his Federal income tax return. 
EXAMPLE: Generally, for Federal income tax purposes for tax years beginning on or after Jan- 
uary 1, 1987, to the extent that the total deductions from passive activities exceed the total income 
from such activities for the tax year, the excess (passive activity loss) is not allowed as a deduction 
for that year. A disallowed passive loss is allowed to be carried forward as a deduction from pas- 
sive activity income in the next succeeding tax year. Generally, losses from passive activities may 
not be deducted from other types of income (e.g., wages, interest, or dividends). A passive activity 
is one that involves the conduct of any trade or business in which the taxpayer does not materially 
participate. Any rental activity is a passive activity regardless of whether the taxpayer materially 
participates. Special rules apply to rental activities. Under State law, a passive loss carried forward 
from a tax year beginning prior to January 1, 1989, must be added back to Federal taxable income 
since the entire loss was deductible on the taxpayer's return for the year the loss was incurred. 

(4) Amounts deducted on an individual's Federal income tax return as net operating losses brought 
forward from tax years beginning prior to January 1, 1989, must be added to Federal taxable in- 
come. For tax years prior to January 1, 1989, State law allowed a net economic loss to be carried 
forward to subsequent years but was computed differently from the Federal net operating loss. 
Prior State law did not permit the loss to be carried back to prior tax years as did Federal law. 
EXAMPLE: An individual sustains a business loss of one hundred thousand dollars ($100,000) 
in 1988, had no other business income or business expenses for that year, and received interest 
income of eighty-two thousand dollars ($82,000) from City of Raleigh bonds during the taxable 
year. For Federal income tax purposes, the individual would have sustained a net operating loss 
of one hundred thousand dollars ($100,000). If the individual had no income in the prior three 
tax years to offset the net operating loss, he could carry the one hundred thousand dollar 
($100,000) loss forward for up to 15 years and deduct it as a net operating loss on his subsequent 
Federal income tax returns. Under prior State law, the individual would have incurred a net eco- 
nomic loss of eighteen thousand dollars ($18,000) [business loss of one hundred thousand dollars 
($100,000) less nontaxable income of eighty-two thousand dollars ($82,000)] that could be carried 
forward up to five years after reducing it by both taxable and nontaxable income. In this situation, 
the individual must add back the net operating loss deduction to his Federal taxable income. 

(5) If an individual recovered all or any portion of his contributions to an annuity for State income 
tax purposes for taxable years beginning prior to January 1, 1989, but such amount was not re- 
covered for federal income tax purposes, he must include a ratable portion of the difference in the 
cost previously recovered for North Carolina purposes and the amount previously recovered for 
Federal purposes on the North Carolina return for each year beginning on or after January 1, 1989. 
EXAMPLE: Both the employee and the employer contributed to the cost of the employee's an- 
nuity and the employee will recover his contribution within three years from the annuity starting 
date. For tax years beginning prior to January 1, 1989, the employee was entitled under State law 
to recover his contributions to the annuity in full before being taxed on the benefits. The ratable 
portion to be added to Federal taxable income is determined as follows: 



Amount recovered Amount recovered 

on State return - on Federal return = Addition to 



Remaining Years Life Expectancy Taxable Income 

If the cost recovered for federal income tax purposes for taxable years beginning prior to January 
1, 1989, is greater than the cost recovered for State income tax purposes for years prior to 1989, the 
ratable portion to be deducted from federal taxable income is determined as follows: 



6:12 NORTH CAROLINA REGISTER September 16, 1991 754 



FINAL RULES 



Amount recovered Amount recovered 

on Federal return - on State return = Deduction from 

Remaining Years Life Expectancy Taxable Income 

The amount of difference in the numerator of the fractions in this Subparagraph should reflect the 
cost recovered during the taxpayer's period of residence in North Carolina and exclude any cost 
recovered during residence in another state. In the denominator, the remaining years life expectancy 
to be entered is the life expectancy determined for federal income tax purposes for the year the an- 
nuity started less the number of tax years the annuity was reportable for federal tax purposes prior 
to January 1, 1989. The amount of the transitional adjustment computed for the tax year 1989 
will remain the same for each year of the individual's remaining life expectancy. 
This transitional adjustment will not apply to retirement annuities from any federal retirement 
program which were taxed unconstitutionally prior to January 1, 1989, and to annuities which were 
exempt under prior State law, including retirement annuities from the North Carolina Teachers' and 
State Employees' Retirement System and the North Carolina Local Governmental Employees' 
Retirement System. Also, this transitional adjustment will not apply to retirement annuities re- 
ceived by former teachers and state employees of other states which were fully exempt from North 
Carolina income tax prior to January 1, 1989, because the other state had no income tax law or 
practiced reciprocity with North Carolina with respect to taxing such benefits. 
This transitional adjustment will apply to retirement annuities received by former teachers and state 
employees of other states which were not fully exempt because those states practiced no reciprocity 
or only partial reciprocity with North Carolina with respect to such benefits for taxable years be- 
ginning prior to January 1, 1989. The amount of cost recovered on the North Carolina return prior 
to January 1, 1989, to be used in the formula for computing the addition to federal taxable income 
is to be computed without considering any benefits which were excluded as the result of partial 
reciprocity. 

(6) Net economic losses sustained in the five taxable years preceding an individual's first taxable year 
beginning on or after January 1, 1989, may be carried forward and deducted from taxable income 
as under prior law. Under prior law, a net economic loss could be carried forward for up to five 
years. The law defines a net economic loss as the amount by which allowable deductions for the 
year other than personal exemptions, nonbusiness deductions and prior-year losses exceed income 
from all sources in the year, including any nontaxable income. 

(7) A Federal net operating loss for a taxable year beginning on or after January 1, 1989, carried back 
for Federal income tax purposes to a taxable year beginning before January 1, 1989, may be de- 
ducted from Federal taxable income in the taxable year following the taxable year in which the loss 
occurred. 

(8) Adjustments must also be made in the taxable income of a shareholder of an S corporation. (See 
17 NC AC 6B .4000) 

(9) When a parent elects to report his child's unearned income, the child is treated as having no gross 
income for the year and is not required to file a Federal income tax return. A parent electing to 
report a child's unearned income for Federal tax purposes must add back to his Federal taxable 
income the amount of the child's unearned income in excess of five hundred dollars ($500.00) but 
not exceeding one thousand dollars ($1,000). 

(10) For taxable years beginning prior to January 1, 1989, an individual engaged in the commercial 
growing of trees could elect to claim a current income tax deduction for reasonable expenses paid 
for reforestation and cultivation or he could elect to amortize such expenses over a period of 60 
months. Federal law required such expenses to be amortized on the federal return over 84 months. 
If a taxpayer elected to claim reforestation expenses currently on his North Carolina tax return for 
tax years beginning prior to January 1, 1989, he must add to Federal taxable income the amount 
deducted as amortization expenses each year on his Federal income tax return. 

A taxpayer who amortized such expenses on his North Carolina return for tax years beginning 
prior to January 1, 1989, may continue to amortize by deducting the allowable amortization ex- 
penses each year on his North Carolina return; however, federal taxable income must be increased 
by the amortization expenses claimed each year on his federal income tax return. 

(11) Other additions and deductions to Federal taxable income may be required to ensure that the 
transition to the new law does not result in the double taxation of income, the exemption of oth- 
erwise taxable income or double allowance of deductions. 



755 6:12 NORTH CAROLINA REGISTER September 16, 1991 



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History Note: Statutory Authority G.S. 105-134.7; 105-262; 
Eff. June 1, 1990; 
Amended Eff. October 1, 1991; July I, 1991; February 1, 1991. 

SECTION .0600 - TAX CREDITS 

.0606 CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES 

(a) A tax credit is allowable for the employment-related expenses for child and dependent care. The 
credit is calculated on the net qualified Federal employment-related expenses after reduction for any 
employer-paid dependent care assistance that is excluded from Federal gross income. In calculating the 
credit, also include expenses incurred in the previous tax year but not paid until the current tax year, 
and expenses paid for the care of a qualifying dependent for whom the Federal earned income tax credit 
for a child born in 1991 was claimed, instead of the federal child and dependent care tax credit. For 
dependents who were seven years old or older and not physically or mentally incapable of caring for 
themselves, the credit is seven percent of the net qualified Federal employment-related expenses. 

(b) For dependents who were under the age of seven and dependents who were physically or mentally 
incapable of caring for themselves, the credit is ten percent of the net qualified Federal employment- 
related expenses. An individual who is not able to dress, clean, or feed himself because of a physical 
or mental condition is not able to care for himself. Individuals with mental conditions who require 
constant attention to prevent them from injuring themselves or others are considered to be unable to 
care for themselves. 

(c) For a dependent who becomes age seven during the taxable year and who is not physically or 
mentally incapable of caring for himself, the tax credit for employment-related expenses incurred prior 
to the dependent's seventh birthday will be calculated at the ten percent rate, and the tax credit for 
employment-related expenses incurred after the dependent becomes age seven will be calculated at the 
seven percent rate. 

(d) If an individual was a resident of North Carolina and his spouse was a nonresident, he may not 
claim credit for any employment-related expenses paid by his spouse. An individual who was a non- 
resident during any part of the tax year, must reduce the employment-related expenses by the amount 
he paid during the period he was a nonresident. 

History Note: Statutory Authority G.S. 105-151.11; 105-262; 
Eff. June 1, 1990; 
Amended Eff October 1, 1991. 



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SECTION .3200 - PENALTIES: INDIVIDUAL INCOME TAX 

.3202 SCHEDULE OF PENALTIES 

The following is the schedule of penalties for individual income tax: 

Cause Penalty 

(1) Failure to file 5% per mo. ($5 min. --25% max.) 

(2) Return filed late 5% per mo. ($5 min. --25% max.) 

(3) Failure to pay by due date 10% ($5 min.--no max.) 

(4) Only a part of tax paid 

when due 10% on unpaid portion 

($5 min.--no max.) 

(5) Assessment after examination: 

(a) Delinquent return showing 
no tax due--tax due after 

audit 5% per mo. to date filed 

($5 min. --25% max. )* 

(b) Delinquent return showing 
tax due and payment made-- 
more tax due after 

audit 5% per mo. to date filed on total 

tax due ($5 min. --25% max.)* 

(6) Negligence: 

(a) Negligent failure to comply 
with law without intent to 

defraud 10% of deficiency 

(no min. --no max.) 

(b) Understatement of gross 
income by 25% or more of 

gross income 25% of deficiency 

(no min. --no max.) 

(c) Overstatement of deductions 
by 25% or more of gross 

income 25% of deficiency 

(no min. --no max.) 

(d) Combination of understatement 
of gross income and 
overstatement of deductions 
by 25% or more of gross 

income 25% of deficiency 

(no min. --no max.) 

(7) Failure to report federal changes 
within two years after receipt of 

Revenue Agent's Report 5% per mo. ($5 min. --25% max.) 

beginning two years from date of 
receipt by taxpayer of Revenue 
Agent's report. (Also forfeits 
right to any refund resulting 
from the changes.) 



757 6:12 NORTH CAROLINA REGISTER September 16, 1991 



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(8) Withholding and estimated income tax: 

(a) Underpayment of estimated 

tax At the applicable rate on 

underpayment for period of 
underpayment . 

(b) Failure to pay over any 
amounts withheld from 

wages (employer) Full amount withheld and 

25% penalty. 

(c) False exemption 

certificate 50% of the amount not 

properly withheld. 

(d) Personal liability Any person required to collect, 

truthfully account for, and pay 
over any amounts required to be 
deducted and withheld, who fails 
to collect and pay over such 
amount shall be personally liable 
for the total amount of tax not 
collected or not accounted for 
and paid over. 

(9) Extension of time granted 

for filing None (if filed by extension due 

date). Applicable penalties start 
as of the extended date. Ten 
percent on remaining balance 
due if tax paid by due date is 
less than 90 percent of the 
total amount due. 

(10) Information returns: 

(a) Failure to file partnership 

information return $5 per mo. ($25 max.) 

(b) Failure to file fiduciary 
return (with no tax due 

thereon) $5 per mo. ($25 max.) 

(c) Failure to file 

NC-1099's $1 per report ($100 max.) 

(d) Failure to file NC-2's $1 per report ($100 max.) 

(11) Fraud 50% of deficiency. 

("A negligence or fraud penalty may also be assessed if applicable. ) 

History Note: Statutory Authority G.S. 1 05-1 59; 105-161 (j); 105-163.15; 105-/63.17; 
105-236; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; July I, 1986; March 11, 1978. 

SECTION .3400 - STATUTE OF LIMITATIONS AND FEDERAL CHANGES 

.3406 REFUNDS 

(a) G.S. 105-266 authorizes refunds to taxpayers for overpayment of taxes of three dollars ($3.00) or 
more with interest beginning 90 days after the tax was paid. A refund of less than three dollars ($3.00) 
will not be made unless a written request is received from the taxpayer. The section also provides a 
time limit for refunds by specifying that "... no overpayment shall be refunded irrespective of whether 
upon discovery or receipt of written demand if such discovery is not made or such demand is not re- 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



758 



FINAL RULES 



ceived within three years from the date set by the statute for the filing of the return or within six months 
of the payment of the tax alleged to be an overpayment whichever date is the later." If the taxpayer 
has been granted an extension of time for filing the return, the three year period referred to in G.S. 
105-266 is three years from the extended date. 

(b) G.S. 105-163.16 provides for the refunding of overpayments amounting to one dollar ($1.00) or 
more which result from the withholding of income taxes from wages at the source or from payments 
made on declarations of estimated tax. An overpayment of less than one dollar ($1.00) will not be 
refunded except upon receipt of a written demand from the taxpayer. Interest on these overpayments 
will be computed from a date six months from the time the return is filed or is due to be filed, whichever 
is later. The time limit for claiming refunds is three years from the due date or six months after pay- 
ment whichever is later, except in the case of federal changes as explained in .3403 of this Section. 

(c) The law requires the interest rate to be determined on or before June 1 for the following six-month 
period beginning on July 1 and on or before December 1 for the following six-month period beginning 
on January 1, The current rate of interest may be obtained by contacting the Department of Revenue. 

History Sole: Statutory Authority G.S. 105-163.16; 105-241. 1; 105-262; 105-266; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; June 1, 1990; August 1, 19S6; May 1, 1984. 

SECTION .3500 - PARTNERSHIPS 

.3513 NONRESIDENT PARTNERS 

(a) When an established business in North Carolina is owned by a partnership having one or more 
nonresident members, the managing partner is responsible for reporting the distributive share of the 
income of each nonresident partner and is required to compute and pay the tax due for each nonresi- 
dent partner. The tax rate is six percent of the nonresident partner's share of income up to twelve 
thousand seven hundred fifty dollars ($12,750), plus seven percent of the income over twelve thousand 
seven hundred fifty dollars ($12,750). The manager is authorized by statute to withhold the tax due 
from each nonresident partner's share of the partnership net income. Payment of the tax on behalf of 
nonresident corporate partners does not relieve the corporation from filing corporate income tax and 
franchise tax returns; however, credit for the tax paid by the managing partner may be claimed on the 
corporate returns. Although a partnership may treat guaranteed payments to a partner for services or 
for use of capital as if they were paid to a person who is not a partner, such treatment is only for pur- 
poses of determining its gross income and deductible business expenses. For other tax purposes, such 
guaranteed payments are treated as a partner's distributive share of ordinary income. In determining 
the allowable North Carolina deductions from Federal taxable income, do not include a partner's sal- 
ary, interest on a partner's capital account, partner relocation and mortgage interest differential pay- 
ments, or payments to a retired partner regardless of whether they were determined without regard to 
current profits. These types of payments are treated as part of the partner's share of the partnership 
income. A nonresident partner is not required to file a North Carolina individual income tax return 
when the only income from North Carolina sources is the nonresident's share of income from a part- 
nership doing business in North Carolina and the manager of the partnership has reported the income 
of the nonresident partners and paid the tax due. A nonresident partner may file an individual income 
tax return and claim credit for the tax paid by the manager of the partnership if the payment is properly- 
identified on the individual income tax return. 

(b) A partnership with one or more nonresident partners whose business operations in North 
Carolina are unified and integrated with its business operations in other states must determine its net 
income attributable to North Carolina, for the purpose of determining the North Carolina income tax 
liability of a nonresident partner, by multiplying the total net income of the partnership by the appor- 
tionment percentage computed in Schedule B of Form D-403. This means that in the allocation of 
net income of a nonresident partner to North Carolina the applicable allocation formula prescribed for 
corporations is used. A partnership whose business operations are not integrated and are segregated 
from its business activities in other states must separately account for its income earned in North 
Carolina. In lieu of completing Schedule B, the partnership should attach a statement to this effect. 
This allocation of income does not affect the reporting of partnership income by the resident partner 
because he is taxed on his share of the net income of the partnership whether or not any portion of it 
is attributable to another state or country. 

History Note; Statutory Authority G.S. 105-I34.5(d); 105-/54; 105-262; 



759 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



Eff. February 1, 1976; 

Amended Eff. October I, 1991; April 1, 1991; 

February 1, 1991; December 1, 1990. 

.3528 PART- YEAR RESIDENT PARTNERS 

A part-year resident receiving partnership income from a partnership doing business in North Carolina 
and in one or more other states, must prorate his share of the partnership's income attributable and 
not attributable to North Carolina between his periods of residence and nonresidence in accordance 
with the number of days in each period. The amount required to be included in the numerator of the 
fraction for determining taxable income is the taxpayer's share of partnership income determined for 
the period of residence, plus the taxpayer's share of the partnership income attributable to North 
Carolina during the period of nonresidence. 

History Note: Statutory Authority G. S. 105-/34.5; 105-154; 105-262; 
Eff. October 1. 1991. 

SECTION .3700 - ESTATES AND TRUSTS 

.3716 FIDUCIARY RETURNS 

(a) The Federal taxable income of the fiduciary is the starting point for preparing a North Carolina 
Fiduciary Return, Form D-407 and requires the same additions, deductions, and transitional adjust- 
ments to Federal taxable income as required for individuals. 

(b) The fiduciary responsible for administering the estate or trust is responsible for filing the fiduciary 
return and paying the tax. The fiduciary must hie an income tax return for the estate or trust for which 
he acts if he is required to file a federal fiduciary income tax return and: 

(1) the estate or trust derives income from North Carolina sources; or 

(2) the estate or trust derives any income which is for the benefit of a resident of North Carolina. 

(c) For estates and trusts located outside of North Carolina, a fiduciary must fde a North Carolina 
fiduciary income tax return for the estate or trust if he is required to fde a federal fiduciary income tax 
return and the estate or trust derives income from: 

(1) North Carolina sources that is attributable to the ownership of any interest in real or tangible 
personal property located in North Carolina, or; 

(2) a business, trade, profession, or occupation carried on in North Carolina. 

(d) The return is required to be filed on or before April 15 if on a calendar year basis and on or before 
the 15th day of the fourth month following the end of the fiscal year if on a fiscal year basis. 

(e) Fiduciaries should be consistent in the use of the name and address of an estate or trust on a re- 
turn. If a different name for an estate or trust is used in any year from that used in the prior year that 
fact should be noted on the first page of the return and the name used in the prior year indicated. The 
use of numbers assigned by banks to estates and trusts are also helpful in the processing of trust returns 
after they are fded. 

History Note: Statutory Authority G.S. 105-160.5; 105-160.6; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October I, 1991; June 1, 1990; April 12, 1981. 

.3718 PAYMENT OF TAX 

(a) The tax rate for estates and trusts is the same as the rates for single individuals. 

(b) There is no provision in the income tax statutes to allow installment payment of income tax due 
on returns fded for estates or trusts. The tax due on a fiduciary return is payable in full by the due date 
of the return. 

History Note: Statutory Authority G.S. 105-160.2; 105-/60.7; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; June I, 1990. 

.3724 ALLOCATION OF INCOME ATTRIBUTABLE TO NONRESIDENTS 

(a) If the estate or trust has income from sources outside of North Carolina and if any of the bene- 
ficiaries are nonresidents of North Carolina, the portion of federal taxable income of the Fiduciary that 
is subject to North Carolina tax must be determined. If there are no nonresident beneficiaries or if there 



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is no gross income from dividends, interest, other intangibles or from sources outside North Carolina 
for the benefit of a nonresident beneficiary', the total income of the estate or trust is taxable to the 
fiduciar>'. In determining the taxable income of an estate or trust located outside North Carolina, do 
not include any intangible income or any other income derived from sources outside North Carolina. 

(b) The determination of the amount of undistributed income from intangible property which is for 
the benefit of a resident is based on the beneficiary's state of residence on the last day of the taxable 
year of the trust. In the case of both resident and nonresident beneficiaries, the determination of the 
amount of undistributed income from intangible property which is for the benefit of a resident is made 
on the basis that the resident beneficiary's interest for the taxable year relates to the interest of both 
resident and nonresident income beneficiaries for the taxable year. 

History Note: Statutory Authority G.S. 105-134.5; 105-160.2; 105-262; 
Eff June 1, 1990; 
Amended Eff. October 1, 1991. 

SECTION .3800 - MISCELLANEOUS RULES 

.3804 MISCELLANEOUS RULES 

(a) When a payment is received by the Department of Revenue for less than the correct tax, penalty, 
and interest due under the law and the facts, and the payment includes the statement, "paid in full" or 
other similar statements, the payment will be deposited as required by G.S. 144-77. The endorsement 
and deposit of the payment with such statement will not make the statement binding on the Depart- 
ment of Revenue and will not prevent the collection of the correct balance due. 

(b) The Department of Revenue is authorized by law to photograph, photocopy, or microphotocopy 
all records of the Department, including tax returns, and such copies, when certified by the Department 
as true and correct copies, shall be admissable in evidence as the original would have been. (G.S. 
8-45.3) 

(c) In some cases debts owed to certain State and county agencies will be collected from an individ- 
ual's income tax refund. If the agency files a claim with the Department for a debt of at least fifty 
dollars ($50.00) and the refund is at least fifty dollars ($50.00), the debt will be set off and paid from 
the refund. The Department will notify the debtor after the set-off has been finalized and will refund 
any balance which may be due. The debtor will be notified and given an opportunity to contest the 
debt to the agency making the claim before the set-off is completed. 

If an individual has an outstanding Federal income tax liability of at least fifty dollars ($50.00), the 
Internal Revenue Service may attach the individual's income tax refund. 

(d) An individual may elect to contribute all or any portion of his income tax refund, at least one 
dollar ($1.00) or more, to the North Carolina Nongame and Endangered Wildlife Fund. Once the 
election is made to contribute, the election cannot be revoked after the return has been filed. The 
contribution will be used to assist in the management and protection of North Carolina's many non- 
game species, including endangered wildlife. The Nongame and Endangered Wildlife Fund will be the 
primary source of money to support much needed research, public education, and management pro- 
grams designated specifically to benefit nongame wildlife. 

(e) When an individual checks "Yes" to the question, "Do you want $1.00 to go to this fund (North 
Carolina Political Parties Financing Fund)?" on his tax return, the total funds designated will be dis- 
tributed to political parties in North Carolina on a pro rata basis according to voter registrations. 
Checking "Yes" will neither increase the tax nor reduce the refund. A married couple fifing a joint 
return may make a designation only if their income tax liability is two dollars ($2.00) or more. 

(f) Tenancy by the Entirety: When filing separate returns a determination must be made as to that 
portion of the income or loss from real property that must be reported by each spouse. Under G.S. 
39-13.6, a husband and wife have equal right to the control, use, possession, rents, income, and profit 
from real property held as tenants by the entirety and each spouse is taxed on one-half of the income 
or loss from such property located in North Carolina. When real property conveyed jointly in the 
name of husband and wife is located in another state and the share of ownership of each is not fixed 
in the deed or other instrument creating the co-tenancy, each spouse is considered as having received 
one-half of the income or loss from the real property unless they can demonstrate that the laws of that 
particular state with respect to the right to the income from the property allocate the income or losses 
in a different manner. 

(g) Cancelled checks, receipts, or other evidence to substantiate deductions on the tax return should 
be kept for a period of at least three years from the due date of the return or three years from the date 



761 6:12 NORTH CAROLINA REGISTER September 16, 1991 



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the return is filed, whichever is later. Lack of adequate records could result in the disallowance of all 
or part of the deductions claimed. A cancelled check, money order stub, or Departmental receipt 
showing payment of tax should be kept for at least five years from the due date of the tax return. 

(h) An individual may elect to contribute all or any portion of his income tax refund (at least one 
dollar ($1.00) or more) to the North Carolina Candidates Financing Fund. Once the election is made 
to contribute, the election cannot be revoked after the return has been filed. The Candidates Financing 
Fund was created to induce candidates for governor and council of state offices to limit their campaign 
spending, and contributions made from refunds will be placed in the Fund. 

(i) In determining North Carolina taxable income, G.S. 105- 134.6(b) allows an individual to deduct 
from his federal taxable income interest received from obligations of the United States or its pos- 
sessions, the State of North Carolina or its political subdivisions, and nonprofit educational institutions 
located in North Carolina, to the extent the interest is included in his federal gross income. Under this 
statute, an individual is allowed to deduct the total of such interest included in his federal gross income 
even though certain expenses incurred in earning the interest are allowed as deductions on his federal 
income tax return. 

G.S. 105- 134.6(c) requires an individual to add interest received from obligations of states other than 
North Carolina and their political subdivisions to federal taxable income in calculating his North 
Carolina taxable income, to the extent the interest is not included in his federal gross income. Under 
this statute, an individual is required to add the total of such interest to federal taxable income even 
though he may have incurred expenses in earning the interest. 

Similar adjustments may be required by a partner or beneficiary. Although the interest passed to a 
partner in a partnership or to a beneficiary of an estate or trust retains its same character as when re- 
ceived by the partnership or the estate or trust, the expenses incurred in earning such income are 
deductible by the partnership or the estate or trust, and the net interest income after deducting the ex- 
penses is reflected in the partner's or beneficiary's pro rata share of the net income of the partnership 
or fiduciary. Therefore, in the case of interest income subject to federal income tax, the partner's or 
beneficiary's federal gross income reflects the net interest income after allowing the expenses incurred 
in earning the income. Interest income not subject to federal income tax is not reflected in the partner's 
or beneficiary's federal taxable income. This being the case, a partner or beneficiary must adjust his 
federal taxable income in determining his North Carolina taxable income as required by G.S. 
105-134. 6(b) and G.S. 105-134. 6(c), as an addition or deduction for the net amount of interest from the 
above sources attributable to a partnership or an estate or trust. 

(j) Effective for sales on or after January 1, 1992, every individual, fiduciary, partnership, corporation, 
or unit of government buying real property located in North Carolina from a nonresident individual, 
partnership, estate or trust is required to complete Form NC-1099NRS, Sale of Real Property by 
Nonresidents, reporting the seller's name, address, and social security number, or federal employer 
identification number; the location of the property; the date of closing; and the gross sales price of the 
real property and its associated tangible personal property. 

Within 15 days of the closing date of the sale, the buyer must file one copy of the report with the 
Department and also furnish a copy of the report to the seller. 

History Note: Statutory Authority G.S. I05-134.6(b); 105-134.6(c); 
105-154; 105-159.1; 105-262; 105-269.6; 
Eff June 1, 1990; 
Amended Eff. October 1, 1991; February 1, 1991. 

SECTION .4000 - S CORPORATION 

.4003 NONRESIDENT SHAREHOLDERS 

(a) A nonresident shareholder of an S corporation takes into account only his share of the S corpo- 
ration's income attributable to North Carolina in the numerator of the fraction in detennining that 
portion of Federal taxable income that is taxable to North Carolina. If an S corporation does business 
in North Carolina and one or more other states, the income attributable to North Carolina is deter- 
mined by the same apportionment formula as used for other corporations. 

(b) All nonresident shareholders must include an agreement with the first S corporation return filed 
with North Carolina agreeing to be liable and subject to the laws of North Carolina for individual in- 
come tax purposes; otherwise, the S corporation becomes liable for the tax on the income attributable 
to such nonresident shareholders at the tax rate for single individuals. 



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(c) A nonresident shareholder in an S corporation may claim the proportionate share of the tax paid 
on his behalf by the S corporation to North Carolina on his share of the S corporation income. 

History Sole: Statutory Authority G.S. 105-131.1; 105-131.5; 105-131.7; 105-134.5(d); 105-262; 
Eff. June 1, 1990; 
Amended Eff. October 1, 1991. 

SECTION .4100 TAXABLE STATUS OF DISTRIBUTIONS FROM REGULATED 

INVESTMENT COMPANIES 

.4102 EXEMPT INTEREST DrvIDENDS 

(a) A mutual fund is qualified to pay exempt interest dividends only if at the close of each quarter 
of its taxable year at least 50 percent of the value of the total assets of the company consist of state and 
local bonds, the interest from which is exempt from Federal income tax and certain other obligations 
on which the interest is exempt from Federal income tax under provisions of Federal law other than 
the Internal Revenue Code, as those provisions of the law were in effect on January 6, 1983. A mutual 
fund paying exempt interest dividends to its shareholders must send its shareholders a statement within 
60 days after the close of the taxable year showing the amount of exempt interest dividends. The ex- 
empt interest dividends are not required to be included in Federal taxable income. 

(b) Since interest from states other than North Carolina and their political subdivisions is required 
to be added to Federal taxable income in calculating North Carolina taxable income, the exempt in- 
terest dividends received from mutual funds must be added to Federal taxable income to the extent such 
dividends do not represent interest from bonds issued by North Carolina and political subdivisions of 
North Carolina, Guam, Puerto Rico, and the United States Virgin Islands, including the governments 
thereof and their agencies, instrumentalities and authorities, provided the mutual fund furnishes a sup- 
porting statement to the taxpayer. In the absence of such statement, the total amount designated as 
exempt interest must be added to Federal taxable income in computing the taxpayer's North Carolina 
taxable income. 

History Note; Statutory Authority G.S. 105- 1 34.6(c); 105-262; 
Eff. June 1, 1990; 
Amended Eff. October 1,1991. 

SUBCHAPTER 6C - WTTHHOLDLNG 

SECTION .0100 - WITHHOLDING INCOME TAXES 

.0103 INCOME NOT SUBJECT TO WITHHOLDING 

History Note; Statutory Authority G.S. 105-154; 105-163.1(6); 105-163.11; 
105-163.14; 105-163.18; 105-262; 
Eff. February 1, 1976; 
Amended Eff June 1, 1990; 
Repealed Eff October 1, 1991. 

.0105 WAGES 

(a) Wages consist of all compensation, whether in cash or other form, paid for services performed 
by an employee, including salaries, fees, and commissions and payments for services performed in prior 
periods, such as vacation pay, bonuses, and pensions. Wages paid in a form other than money are 
measured by the fair market value of the goods or consideration given in payment, and withholding is 
required whether payments are based on time (hour, day, week, et cetera), or on piece work, commis- 
sion, or percentage. 

(b) Employers are required to withhold tax to the same extent required for Federal income tax pur- 
poses with two exceptions: 

( 1) Withholding is not required on pensions, annuities and certain deferred income, and 

(2) Withholding is not required on payments to an individual employed on a farm for services ren- 
dered on the farm in the production, harvesting and transportation of agricultural products to 
the market for the farmer-employer. 



763 6:12 NORTH CAROLINA REGISTER September 16, 1991 



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(c) If an employer enters into a voluntary agreement to withhold North Carolina tax on income not 
requiring withholding, the amount withheld will be accepted and the employee will receive credit on 
his annual income tax return provided the rules which apply to withholding are followed. Since the 
agreement to withhold is voluntary between the employer and the employee and is not required by law, 
the employee should understand that he cannot receive credit for any amount withheld that is not 
properly paid to the Department of Revenue. 

History Note: Statutory Authority G.S. 105-163.1(13); 105-163.2; 105-163.18; 105-262; 
Eff February I, 1976; 
Amended Eff. October 1. 1991; June 1, 1990. 

.0109 MINISTERS 

An ordained or licensed clergyman who performs services for a church of any religious denomination 
may fde an election with the Secretary of Revenue and the church he serves to be considered an em- 
ployee of the church instead of self-employed. Until a clergyman fdes an election, amounts paid by a 
church to a clergyman are not subject to withholding. 

History Note: Statutory Authority G.S. 105-163. 1 A; 105-/63.2; 105-163.18; 105-262; 
Eff February 1, 1976; 

Amended Eff October I, 1991; August I, 1986; 
February 21, 1979. 

.0123 EMPLOYEE'S WTTHHOLDLNG ALLOWANCE CERTIFICATE 

(a) Each new employee, before beginning employment, must furnish his employer with a signed 
North Carolina Employee's Withholding Allowance Certificate, Form NC-4. A certificate fded by a 
new employee is effective upon the first payment of wages thereafter and remains in effect until a new 
one is furnished. State and Federal definitions of dependent, single person, married, head of household, 
and qualifying widow(er) are the same; however, the number of allowances an individual is entitled to 
will differ. (Federal Exemption Certificates Are Not Acceptable.) If anemployee fails to furnish an 
exemption certificate, Form NC-4, the employer must withhold tax as if the employee is single with 
one allowance. 

(b) The employer is not required to ascertain whether or not the total amount of allowances claimed 
is greater than the total number to which the employee is entitled. If, however, the employer has reason 
to believe that the number of allowances claimed by an employee is greater than the number to which 
such employee is entitled, the employer is requested to notify the Department of Revenue immediately. 

(c) If an employee's allowances should decrease, requiring more tax to be withheld, the employee is 
required to furnish his employer with an amended certificate within ten days after the change. Should 
the allowances increase, requiring less tax to be withheld, the employee may furnish his employer with 
an amended certificate at any time after the change occurs. 

History Note: Statutory Authority G.S. 105-163.3; 105-163.5; 105-163.18; 105-262; 
Eff June 1, 1990; 
Amended Eff. October 1, 1991. 

SECTION .0200 - FILLNG WTEHHOLDLNG REPORTS 

.0203 ANNUAL REPORTS 

(a) At the end of each calendar year employers are required to furnish wage and tax statements, Form 
NC-2, to employees. Two copies must be furnished to the employee and one copy must be furnished 
to the Department. The Internal Revenue Service supplies a six part Form W-2 which will produce 
the required federal and North Carolina statements in one packet. 

(b) The copies of the wage and tax statements for the Department of Revenue must be fded with the 
Annual Reconcdiation of North Carolina Income Tax Withheld. 

(c) Reports of payments of income, interest, rents, premiums, dividends, annuities, remunerations, 
emoluments, fees, gains, profits, taxable meal reimbursements, and other determinable annual or peri- 
odic gains during a calendar year must be made on Information at the Source Reports, Form NC-1099, 
if the payments have not otherwise been reported. 

History Note: Statutory Authority G.S. 105-154; 105-163.7; 105-163.18; 105-262; 



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Eff February 1, 1976; 

Amended Eff. October I, 1991; February 1, 1991; June 1, 1990; April 12, 198L 

SECTION .0300 - PAYMENT OF INCOME TAX WITHHELD 

.0301 GENERAL 

.0302 PENALTY 

.0303 PERSONAL LIABILITY 

.0304 JEOPARDY REPORTLNG AND PAYMENT 

History Note: Statutory Authority G.S. 105-163.6(a); 105-163.6(b); 
105-163.6(f); 105-163.17; 105-241 .1(g); 105-262; 
Eff. July 1, 1986; 
Repealed Eff. October 1, 1991. 

SUBCHAPTER 6D - ESTIMATED TAX 

SECTION .0100 - FILES G ESTIMATED LNCOME TAX PAYMENTS 

.0102 REQUIREMENTS FOR FILLNG 

(a) An individual is required to pay estimated income tax if the tax shown due on the income tax 
return for the taxable year, reduced by the North Carolina tax withheld and allowable tax credits, is 
forty dollars ($40.00) or more regardless of the amount of income the individual has that is not subject 
to withholding. 

(b) Married individuals can make joint payments of estimated income tax even if they are not living 
together; however, they are not entitled to make joint estimated tax payments if they are separated 
under a decree of divorce or of separate maintenance. Also, they may not make joint estimated tax 
payments if either of them is a nonresident alien or if either of them have different tax years. Whether 
a man and wife make joint estimated tax payments or separate payments will not affect their choice 
of filing a joint income tax return or separate return. If they make joint payments and then file separate 
returns, they may divide the estimated tax payments between them. 

(c) A taxpayer filing a short period return because of changing his income year is required to make 
estimated income tax payments on the installment dates which fall within the short period and 1 5 days 
after the close of the short period which would have been due had he not changed his income year. 
The penalty for underpayment of estimated income tax for a short period will be computed for the 
period of underpayment based on the tax shown due on the short period return and computed in the 
same manner as it would have been computed had the taxpayer not changed his income year. 

(d) An individual may elect to have his or her income tax refund applied to estimated income tax for 
the following year. For example, an individual due a refund on his 1991 income tax return may have 
all or any portion of the refund applied to his estimated tax for 1992. The individual may not however, 
file a 1991 tax return in 1993 and request the refund be applied to his 1993 estimated tax since the re- 
fund can only be applied to the tax year which follows the year for which the request for refund is made. 
The last allowable due date for making a 1992 estimated tax payment is January 15, 1993; therefore, 
you must file your 1991 income tax return by January 15, 1993, to elect to apply a portion of your 
refund to 1992 estimated tax. 

(e) If an individual makes a valid election, that individual may not revoke the election after the return 
has been filed in order to have the amount refunded or applied in any other manner, such as an offset 
against any subsequently determined tax liability. 

History Note: Statutory Authority G.S. 105-163.15; 105-163.18; 105-262; 
Eff. February 1, 1976; 
Amended Eff October 1, 1991; June 1, 1990; February 1, 1988; August 1, 1986. 

SECTION .0200 - PENALTY FOR UNDERPAYMENT OF ESTIMATED LNCOME TAX 

.0206 AVOIDING PENALTY 

The penalty for underpayment of estimated income tax will not apply if the individual makes pay- 
ments of estimated income tax on each installment date for 25 percent of the lesser of: 



765 6:12 NORTH CAROLINA REGISTER September- 16, 1991 



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(1) 90 percent (66.67 percent for farmers and fishermen) of the tax (after tax credits) on the current 
year's return, 

(2) 100 percent of the tax on the preceding year's return (provided it was a taxable year of 12 months 
and the individual filed a return for that year), or 

(3) 90 percent (66.67 percent for farmers and fishermen) of the tax determined by annualizing the 
income received during the year up to the month in which the installment is due. 

Also, no penalty for underpayment will be due if an individual had no tax liability for the preceding 
year or if the total tax shown on the current-year return minus the amount paid through withholding 
is less than forty dollars ($40.00). 

History Note: Statutory Authority G.S. 105-163.15; 105-163.18; 105-262; 
Eff. June J, 1990; 
Amended Eff. October 1, 1991. 

.0209 DETERMINING AN UNDERPAYMENT 

(a) No penalty will be due if the estimated tax payments were made on time and the payment for each 
period was at least as much as either the required installment or the annualized income installment for 
the period. Use Form D-422, Penalty for Underpayment of Estimated Income Tax, to determine any 
underpayment. 

(b) The required installment for any payment period is the lesser of 22.5 percent of the tax shown 
on the current-year return or 25 percent of the tax shown on the prior-year return (if the prior-year 
return covered all 12 months of the year). However, if the annualized income installment for any pe- 
riod is less than the required installment for the same period and the annualized income installment is 
used in determining the underpayment, add the difference between the annualized income installment 
and the required installment to the required installment for the next period. If the annualized income 
installment for the next payment period is used, add the difference between the annualized income in- 
stallment for that period and the required installment (as increased) for that period to the required in- 
stallment for the following payment period. 

(c) There will be no underpayment for any payment period in which the estimated tax payments, 
reduced by any amounts applied to underpayments in earlier periods, were paid by the due date for the 
period and were at least as much as the annualized income installment for the period. 

History Note: Statutory Authority G.S. 105-163.15; 105-163.18; 105-262; 
Eff June 1, 1990; 
Amended Eff. October J, 1991. 

CHAPTER 8 - INTANGIBLES TAX DrVISION 

SECTION .0400 - ACCOUNTS RECEIVABLE 

.0403 ACCOUNTS RECEIVABLE SUBJECT TO TAXATION 

Accounts receivable which are subject to intangibles tax include, but are not limited to, the following: 

(1) trade accounts, open book accounts and charge accounts; 

(2) revolving type charge accounts; 

(3) salaries and commissions receivable; 

(4) bonuses receivable if such bonuses were declared or were otherwise determinable as of the valu- 
ation date; 

(5) dividends receivable; 

(6) tax refunds which have been approved for payment; 

(7) dealer reserves and finance reserves due from banks, finance companies, etc; 

(8) the total amount of periodic or progress billings (excluding retainage) to which a contractor is 
entitled under terms of contracts in progress; 

(9) accounts receivable of all taxpayers whether they are operating on a cash or an accrual basis; 

(10) accounts receivable of professional associations and professional persons when such accounts 
represent amounts owing to them for professional services; 

(11) all inter-company receivables which are not evidenced by a note or other written evidences of 
debt; 

(12) accrued rent which is due or otherwise determinable as of the valuation date; 

(13) royalties which have become due or which are otherwise determinable as of the valuation date; 



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(14) patronage dividends; 

(15) accounts receivable which have a business, commercial or taxable situs in North Carolina, even 
though such accounts may be owned by a nonresident or foreign corporation. 

History Sote: Statutory Authority G.S. 105-201; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; February 1, 1991; August 1, 19S6; December 1, 1985. 

.0404 DEDUCTIBLE ACCOUNTS PAYABLE 

Accounts payable which may be deducted from accounts receivable include, but are not limited to, 
the following: 

( 1) trade accounts, charge accounts and certain accrued expenses not evidenced by a note or condi- 
tional sales contract; 

(2) accrued salaries, wages and commissions payable; 

(3) accrued dividends payable; 

(4) accrued bonuses payable provided such bonuses were declared or were otherwise determinable 
as of the valuation date; 

(5) federal and state withholding taxes and that portion of social security taxes withheld from em- 
ployees; 

(6) the amount of periodic or progress billings (excluding retainage) payable to a contractor under 
terms of a contract in progress; 

(7) amounts due for professional services; 

(8) all inter-company payables which are not evidenced by a note or other written evidences of debt; 

(9) accrued rent payable or otherwise determinable as of the valuation date; 

(10) royalties payable or otherwise determinable as of the valuation date; 

(11) certain short term notes payable may qualify as accounts payable provided they were issued or 
made for a term of one year or less and are not deducted as notes payable under G.S. 105-202. 
(This deduction does not apply to notes "pavable on demand" or the current portion of long term 
debt.); 

(12) amounts due and payable to pension and profit-sharing trusts which qualify as exempt from state 
income tax; 

(13) in the case of banks, checking account and demand saving account liabilities are deductible as 
accounts payable. 

History Sote: Statutory Authority G.S. 105-201; 105-262; 
Eff. February 1, 1976; 
Amended Eff. October 1, 1991; February 1, 1991; August 1, 1986; December 1, 1985. 

SECTION .0500 - NOTES: BONDS AND OTHER EVIDENCES OF DEBT 

.0506 DEDUCTIONS FOR LIKE EVIDENCES OF DEBT OWED 

Notes, bonds and other evidences of debt owed which may be deducted from notes, bonds and other 
evidences of debt owned include, but are not limited to, the following: 

(1) Notes and mortgages payable; 

(2) Liabilities resulting from the issuance of bonds, debentures, participation certificates and com- 
mercial paper; 

(3) Payables evidenced by conditional sales contracts; 

(4) Notes owed to affiliated companies; 

(5) accrued interest due on notes, bonds and other evidences of debt; 

(6) Accounts payable to security brokers; provided they were incurred directly for the purchase of 
bonds, debentures and similar investments taxable under G.S. 105-202; 

(7) In the case of banks, certificate of deposit liabilities are deductible as evidences of debt payable; 

(8) Amounts owing to banks under retail credit card plans. 

History Note: Statutory Authority G.S. 105-202; 105-262; 
Eff. February 1, 1976; 
Amended Eff October 1. 1991; October 25, 1979; October 15, 1978; July 1, 1977. 



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CHAPTER 9 
MOTOR FUELS TAX DIVISION 

SUBCHAPTER 9F - DrVTSIONAL RULES 

.0003 DF\ ISIONAL ORGANIZATION 

The Motor Fuels Tax Division is administered by a director and assistant director. The Division is 
divided into three sections: administrative, oiFice operations, and audit sections. 

(1) The administrative section includes the director, assistant director, and two secretaries. It is the 
responsibility of the director and assistant director to administer the entire operations of the Divi- 
sion. They handle personnel matters in conjunction with the section supervisors; devise rules and 
regulations; resolve controversial issues; conduct conferences with taxpayers and their represen- 
tatives; represent the Department in hearings before the Secretary of Revenue and generally direct 
the activities of the Division. 

(2) The office operations section receives and processes gasoline, special fuels and highway fuel use 
reports as well as quarterly and annual refund claims for motor fuels. This section issues vehicle 
fuel registrations and temporary emergency permits and is responsible for the accounting functions. 
An administrative assistant directs the operations of this section. 

(3) The field audit section is responsible for making the necessary field audits for all schedules ad- 
ministered by the Motor Fuels Tax Division. The assistant director directs the operations of this 
section. 

History Xote: Statutory Authority G.S. 105-430 through 105-449.56; 
119-15 through 119-22; 143B-I0; I43B-22I; 
Eff January 1, 1983; 
Amended Eff. October I, 1991; February 1, 1990; March 1, 1987. 

SUBCHAPTER 9G - MOTOR FUELS TAX DIVISION 

SECTION .0100 - APPLICATION FOR AND CANCELLATION OF LICENSE AS A 

DISTRIBUTOR 

.0103 USER UNQUALIFIED 

History Note: Statutory Authority G.S. 105-262; 105-430; 105-433; 105-434; 
Eff. January I, 1983; 
Repealed Eff. October I. 1991. 

.0104 AMOUNT OF BOND REQUIRED 

(a) The requirements set by the Department of Revenue for a motor fuel distributor's bond or 
irrevocable letter of credit are based on two times the following: 

(1) For an applicant who imports motor fuel, the average monthly amount of tax liability if the sale 
of imported motor fuel to a distributor were subject to tax plus the applicant's average expected 
monthly tax liability. 

(2) For an applicant who does not import fuel, the average expected monthly tax liability. 

(b) The amount of bond or irrevocable letter of credit shall be rounded to the nearest one thousand 
dollars ($1,000.00). If the amount required is exactly between two one thousand dollar ($1,000.00) 
increments, the amount shall be rounded to the higher of the two. The maximum amount required is 
one hundred twenty-five thousand dollars ($125,000.00) and the minimum amount required is two 
thousand dollars ($2,000.00). 

History Note: Statutory Authoritv G.S. 105-262; 105-433; 
Eff. January I, 1983; 
Amended Eff. October 1, 1991; August 1, 1983. 

.0105 TYPES OF ACCEPTABLE BONDS 

The Motor Fuels Tax Division will accept surety bonds on Form Gas. 1212, furnished by this De- 
partment, which have been properly executed by any surety company authorized to do business in this 
State. The Division will also accept the following types of collateral to execute a bond: 



6:12 NORTH CAROLINA REGISTER September 16, 1991 768 



FINAL RULES 



(1) Negotiable U.S. Treasury bonds; 

(2) Negotiable L'.S. Treasury notes; 

(3) State of North Carolina bonds; 

(4) Certificates of deposit or cashier's checks, made payable to the taxpayer; 

(5) Public School Facilities bonds; 

(6) Housing Finance Agency bonds. 

History Note: Statutory Authority G.S. J 05-262; 105-441 ; 105-442; 
Eff January 1, 1983; 
Amended Eff. October I, 1991; March I, 1987. 

.0106 CANCELLATION OF LICENSE AND BOND 

History Note; Statutory Authority G.S. 105-262; 105-441; 105-442; 
Eff. January 1, 1983; 
Amended Eff. March I, 1987; 
Repealed Eff October 1, 1991. 

SECTION .0200 - FIRST SALE TO LICENSED DISTRIBUTORS FROM PIPELLNE OR PORT 

TERMLNALS 

.0204 EXCHANGE AGREEMENTS 

History Note: Statutory Authority G.S. 105-262; 105-432; 
Eff. January 1, 1983; 
Amended Eff. March 1, 1987; 
Repealed Eff October 1, 1991. 

SECTION .0400 REBATES FOR FUELS SOLD TO THE UNITED STATES GOVERNMENT 

AND PUBLIC SCHOOLS 

.0401 DELPv TRIES TO THE NATIONAL GUARD 

History Note: Statutory Authority G.S. 105-262; 105-439; 
Eff. January 1, 1983; 
Repealed Eff. October 1, 1991. 

.0404 EXEMPTION OF MOTOR FUELS: PUBLIC SCHOOLS AND STATE AGENCIES 

An application for, and the acceptance of a credit card for the purchase of motor fuels by a city or 
county board of education or a state agency shall constitute a "contract" as required by G.S. 105-449 
and G.S. 105-449A. If a purchase of motor fuel is for a dollar amount that is less than the amount that 
requires vendors by law to have a state contract then G.S. 105-449 and G.S. 105-449A do not require 
the vendor to hold a state contract. The sales invoice for motor fuels, signed by a person authorized 
to purchase motor fuels for a city or county board of education or a state agency, shall constitute a 
"purchase order" as required by G.S. 105-449 and G.S. 105-449A. 

History Note: Statutory Authority G.S. 105-262; 105-449; 105-449A; 
Eff January 1, 1983; 
Amended Eff. October I, 1991; March 1, 1987. 

SECTION .0500 - REFUNDS 

.0510 COUNTIES: CITIES AND OTHERS: FORM GAS. 1200 

Counties, municipal corporations, volunteer fire departments, county fire departments, volunteer res- 
cue squads, "sheltered workshop" organizations recognized and approved by the Department of Hu- 
man Resources, city transit systems and private non-profit organizations transporting passengers under 
contract with or at the express designation of units of local government must file Form Gas. 1200 to 
obtain a refund of tax paid on motor fuels. 



769 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



The application requires an accounting of tax paid motor fuels purchased and used. Invoices for the 
tax paid motor fuels must be submitted with the application. 

History Note: Statutory Authority G.S. 105-262; 105-446.1; 105-446.3; 
Eff. January I, 1983; 
Amended Eff. October I, 1991; March 1, 1987. 

SUBCHAPTER 9H - SPECIAL FUELS TAX 

SECTION .0100 - SPECIAL FUELS LICENSES 

.0101 APPLICATION FOR SUPPLIER'S LICENSE 

History Note: Statutory Authority G.S. 105-262; 105-449.2 through 105-449.8; 105-449.32; 
Eff. January 1, 1983; 
Repealed Eff. October /, 1991. 

.0102 AMOUNT OF BOND REQUIRED 

The requirements set by the Department of Revenue for a supplier's bond or irrevocable letter of 
credit are based on two times the applicant's average expected monthly tax liability. The amount re- 
quired shall be rounded to the nearest one thousand dollars ($1,000.00). If the amount required is 
exactly between two one thousand dollar ($1,000.00) increments, the amount shall be rounded to the 
higher of the two. The maximum amount required is one hundred twenty-five thousand dollars 
($125,000.00) and the minimum amount required is five hundred dollars ($500.00). 

History Note: Statutory Authority G.S. 105-262; 105-449.5; 105-449.32; 
Eff. January 1, 1983; 
Amended Eff. October 1, 1991; March 1, 1987; August 1, 1983. 

.0103 TYPES OF ACCEPTABLE BONDS 

The Motor Fuels Tax Division will accept surety bonds on Form Gas. 1212, furnished by the De- 
partment, which have been properly executed by any surety company authorized to do business in this 
State. The Division will also accept the following types of collateral to execute a bond: 

(1) Negotiable U.S. Treasury bonds; 

(2) Negotiable U.S. Treasury notes; 

(3) State of North Carolina bonds; 

(4) Certificates of deposit or cashier's checks, made payable to the taxpayer; 

(5) Public School Facilities bonds; 

(6) Housing Finance Agency bonds. 

History Note: Statutory Authority G.S. 105-449.5; 105-449.32; 
Eff January I, 1983; 
Amended Eff. October I, 1991; March I, 1987. 

.0104 LEASE OPERATIONS 

History Note: Statutory Authority G.S. 105-449.3; 105-449.21; 105-449.22; 105-449.32; 
Eff. January 1, 1983; 
Amended Eff. August 1, 1983; 
Repealed Eff October I, 1991. 

SECTION .0300 - LIQUIFIED PETROLEUM GAS 

.0302 FUEL FROM CARGO SUPPLY TANK 

Propane gas suppliers using directly from their cargo supply tank are required to report and pay road 
tax and inspection fees based on the trucks storage tank water (shell) capacity, as follows: 

Tank Capacity Miles Per Gallon 



6:12 NORTH CAROLINA REGISTER September 16, 1991 770 



FINAL RULES 



.0203 TYPES OF ACCEPTABLE BONDS 

The Motor Fuels Tax Division will accept surety bonds on Form Gas. 1212, furnished by this De- 
partment, which have been properly executed by any surety company authorized to do business in this 
State. The Division will also accept the following types of collateral to execute a bond: 

(1) Negotiable U.S. Treasury bonds; 

(2) Negotiable U.S. Treasury notes; 

(3) State of North Carolina bonds; 

(4) Certificates of deposit or cashier's checks, made payable to the taxpayer; 

(5) Public School Facilities bonds; 

(6) Housing Finance Agency bonds. 

History Note: Statutory Authority G.S. 105-262; 105-2693; 119-16.2; 
Eff January 1, 1983; 
Amended Eff. October 1, 1991; March 1, 1987. 

TITLE 19A 
DEPARTMENT OF TRANSPORTATION 

CHAPTER 3 - DIVISION OF MOTOR VEHICLES 

SUBCHAPTER 3D - ENFORCEMENT SECTION 

SECTION .0500 - GENERAL INFORMATION REGARDLNG SAFETY LNSPECTION OF 

MOTOR VEHICLES 

.0515 SAFETY LNSPECTION LICENSLNG AND PROCEDURES 

(a) The Director of the Office of Administrative Hearings has determined that publication of the 
complete regulations governing licensing as a North Carolina Safety Equipment Inspection Station, and 
the requirements and procedures for such inspections are impracticable, and that the substance of this 
Rule should be summarized in accordance with the provisions of G.S. 150B-63(c). 

(b) The regulations and procedures governing the licensing of Safety Equipment Inspection Stations 
for all counties are contained in a manual entitled "Safety Equipment Emission Inspections, Windshield 
Certificate Replacement Regulations Manual." This manual includes all procedures and forms to be 
used in the process of the safety inspection required by law. 

(c) Official copies of these manuals are available upon request from the Enforcement Section, Divi- 
sion of Motor Vehicles, Department of Transportation, 1 100 New Bern Avenue, Raleigh, N. C. 27697. 

History Note: Statutory Authority G.S. 20-1; 20-1 17.1 (a); 20-122; 20-122.1; 20-123.1; 
20-124; 20-125; 20-125.1; 20-126; 20-127; 20-128; 20-128.1; 20-129; 
20-129.1; 20-/30; 20-/30.1; 20-130.2; 20-130.3; 20-131 through 20-134; 
20-183.2; 20-183.3; 20-183.4; 20-183.5; 20-183.6; 20-183.7; 20-183.8; 150B-63(c); 
Eff. January 1, 1983; 
Amended Eff. October 1, 1991; October 1, 1989; November I, 1988. 

SECTION .0800 - SAFETY RULES AND REGULATIONS 

.0801 SAFETY OF OPERATION AND EQUIPMENT 

(a) The rules and regulations adopted by the U.S. Department of Transportation relating to safety 
of operation and equipment (49 CFR Parts 390-398 and amendments thereto) shall apply to all for-hire 
motor carrier vehicles, whether common carriers, contract carriers or exempt carriers and all private 
motor carriers, while engaged in interstate commerce over the highways of the State of North Carolina. 

(b) The rules and regulations adopted by the U.S. Department of Transportation relating to safety 
of operation and equipment (49 CFR Parts 390-398 and amendments thereto) shall apply to all for-hire 
motor carrier vehicles, whether common carriers, contract carriers or exempt carriers and all private 
motor carrier vehicles engaged in intrastate commerce over the highways of the State of North Carolina 
if such vehicles have a GVWR of greater than 26,000 pounds; are designed to transport 16 or more 
passengers, including the driver; or transport hazardous materials required to be placarded pursuant to 
49 CFR 170-190. Provided, the following exceptions shall also apply to all intrastate motor carriers: 



773 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



Eff. March 1, 1987; 
Amended Eff. October 1, 1991. 

SUBCHAPTER 91 - HIGHWAY FUEL USE TAX 

SECTION .0200 - NORTH CAROLINA FUEL PURCHASES 

.0201 N.C. RETAIL FUEL PURCHASE INVOICES 

(a) North Carolina retail fuel purchase invoices must contain the following information: 

( 1 ) Date of purchase ; 

(2) Seller's name and address; 

(3) Purchaser's name (in the case of a lessee/lessor agreement, receipts will be accepted in either 
name, provided a legal connection can be made to reporting party); 

(4) Number of gallons; and total cost of fuel; 

(5) Fuel type; and 

(6) Company unit number or vehicle license plate number and state. 

(b) In order for the motor carrier to obtain credit for retail tax paid purchases, a receipt or invoice, 
a credit card receipt, or microfilm/microfiche, or computer imaging of the receipt or invoice must be 
retained by the motor carrier showing evidence of such purchases and tax having been paid. 

(c) Invoices must be maintained for a period of at least three years for possible audit by an agent of 
the North Carolina Department of Revenue. 

History Note: Statutory Authority G.S. 105-262; 105-449.10; 105-449.26; 105-449.32; 105-449.39; 
Eff. January 1, 1983; 
Amended Eff. October 1, 1991; February 1, 1990. 

SECTION .0300 - CREDITS AND REFUNDS 

.0304 TYPES OF ACCEPTABLE BONDS 

The Motor Fuels Tax Division will accept surety bonds on Form Gas. 1212, furnished by this De- 
partment, which have been properly executed by any surety company authorized to do business in this 
State. The Division will also accept the following types of collateral to execute a bond: 

(1) Negotiable U.S. Treasury bonds; 

(2) Negotiable U.S. Treasury notes; 

(3) State of North Carolina bonds; 

(4) Certificates of deposit or cashier's checks, made payable to the taxpayer; 

(5) Public School Facilities bonds; 

(6) Housing Finance Agency bonds. 

History Note: Statutory Authority G.S. 105-262; 105-449.40; 
Eff January I, 1983; 
Amended Eff. October I, 1991; March I, 1987. 

SECTION .0500 - REGISTRATION CARDS AND IDENTIFICATION MARKERS 

.0506 DEALER. MANUFACTURER: DRrVEAWAY: TRANSPORTER 

Persons operating heavy vehicles with a dealer, manufacturer, driveaway or transporter license plate, 
issued either in North Carolina or other jurisdictions must obtain a fuel registration card and a vehicle 
identification marker, from the Motor Fuels Tax Division. The marker does not have to be mounted 
on the vehicle. There is no fee for the fuel registration card. These vehicles must have a fuel registra- 
tion card at all times while operating in North Carolina. 

History Note: Statutory Authority G.S. 105-262; 105-449.45; 105-449.47; 105-449.48; 105-449.50; 
Eff. March 1, 1987; 
Amended Eff. October 1, 1991; February I, 1990. 

SUBCHAPTER 9J - GASOLINE: SPECIAL FUELS AND KEROSENE LNSPECTION 

SECTION .0200 - KEROSENE IMPORTER 



6:12 NORTH CAROLINA REGISTER September 16, 1991 772 



FINAL RULES 



.0203 TYPES OF ACCEPTABLE BONDS 

The Motor Fuels Tax Division will accept surety bonds on Form Gas. 1212, furnished by this De- 
partment, which have been properly executed by any surety company authorized to do business in this 
State. The Division will also accept the following types of collateral to execute a bond: 

(1) Negotiable U.S. Treasury bonds; 

(2) Negotiable U.S. Treasury notes; 

(3) State of North Carolina bonds; 

(4) Certificates of deposit or cashier's checks, made payable to the taxpayer; 

(5) Public School Facilities bonds; 

(6) Housing Finance Agency bonds. 

History Note: Statutory Authority G.S. 105-262; 105-269.3; 119-16.2; 
Eff. January 1, 1983; 
Amended Eff. October 1, 1991; March 1, 1987. 

TITLE 19A 
DEPARTMENT OF TRANSPORTATION 

CHAPTER 3 - DFV ISION OF MOTOR VEHICLES 

SUBCHAPTER 3D - ENFORCEMENT SECTION 

SECTION .0500 - GENERAL LNFORMATION REGARDLNG SAFETY LNSPECTION OF 

MOTOR VEHICLES 

.0515 SAFETY FNSPECTION LICENSFNG AND PROCEDURES 

(a) The Director of the Office of Administrative Hearings has determined that publication of the 
complete regulations governing licensing as a North Carolina Safety Equipment Inspection Station, and 
the requirements and procedures for such inspections are impracticable, and that the substance of this 
Rule should be summarized in accordance with the provisions of G.S. 150B-63(c). 

(b) The regulations and procedures governing the licensing of Safety Equipment Inspection Stations 
for all counties are contained in a manual entitled "Safety Equipment Emission Inspections, Windshield 
Certificate Replacement Regulations Manual." This manual includes all procedures and forms to be 
used in the process of the safety inspection required by law. 

(c) Official copies of these manuals are available upon request from the Enforcement Section, Divi- 
sion of Motor Vehicles, Department of Transportation, 1 100 New Bern Avenue, Raleigh, N. C. 27697. 

History Note: Statutory Authority G.S. 20-1; 20-1 17.1 (a); 20-122; 20-122.1; 20-123.1; 
20-124; 20-125; 20-125.1; 20-126; 20-127; 20-/28; 20-128.1; 20-129; 
20-129.1; 20-/30; 20-130.1; 20-130.2; 20-130.3; 20-131 through 20-134; 
20-183.2; 20-183.3; 20-183.4; 20-183.5; 20-183.6; 20-183.7; 20-183.8; 150B-63(c); 
Eff. January 1, 1983; 
Amended Eff. October 1, 1991; October I, 1989; November 1, 1988. 

SECTION .0800 - SAFETY RULES AND REGULATIONS 

.0801 SAFETY OF OPERATION AND EQUIPMENT 

(a) The rules and regulations adopted by the U.S. Department of Transportation relating to safety 
of operation and equipment (49 CFR Parts 390-398 and amendments thereto) shall apply to all for-hire 
motor carrier vehicles, whether common carriers, contract carriers or exempt carriers and all private 
motor carriers, while engaged in interstate commerce over the highways of the State of North Carolina. 

(b) The rules and regulations adopted by the U.S. Department of Transportation relating to safety 
of operation and equipment (49 CFR Parts 390-398 and amendments thereto) shall apply to all for-hire 
motor carrier vehicles, whether common carriers, contract carriers or exempt carriers and all private 
motor carrier vehicles engaged in intrastate commerce over the highways of the State of North Carolina 
if such vehicles have a GVWR of greater than 26,000 pounds; are designed to transport 16 or more 
passengers, including the driver; or transport hazardous materials required to be placarded pursuant to 
49 CFR 170-190. Provided, the following exceptions shall also apply to all intrastate motor carriers: 



773 6:12 NORTH CAROLINA REGISTER September 16, 1991 



FINAL RULES 



(1) An intrastate motor carrier driver may not drive more than 12 hours following eight consecutive 
hours off duty; or for any period after having been on duty 16 hours following eight consecutive 
hours off duty; or after having been on duty 70 hours in seven consecutive days; or more than 
80 hours in eight consecutive days. An intrastate driver will be determined by his previous seven 
days of operation. 

(2) Persons who otherwise qualify medically to operate a commercial motor vehicle within the State 
of North Carolina will be exempt from provisions of Part 391.11(b)(1) and Part 391.41(b)(1) 
through (11) and therefore will be authorized for intrastate operation if licensed prior to March 
30, 1992, are approved by an Exemption Review Officer appointed by the Commissioner of 
Motor Vehicles and meet all other requirements of this Section. These drivers shall continue 
to be exempt upon completion of a biennial medical examination indicating the condition has 
not worsened or no new disqualifying conditions have been diagnosed and upon continued ap- 
proval of an Exemption Review Officer. 

History Note: Statutory Authority G.S. 20-384; 
Eff. December 1, 1983; 
Amended Eff. October I, 1991; June I, 1991; November 1, 1990; September 1, 1990. 

SUBCHAPTER 3J - RULES AND REGULATIONS GOVERNING THE LICENSLNG OF 
COMMERCIAL TRUCK DRIVERS TRAINING SCHOOLS AND INSTRUCTIONS 

SECTION .0800 - LICENSE REVOCATION OR SUSPENSION 

.0803 REVOCATION OR SUSPENSION PROCEDURE 

If any school or instructor or recruiter is alleged to be in violation of any provision of Article 14, 
Chapter 20 or of any provision of these Regulations, the school or instructor or recruiter shall be no- 
tified by certified or registered mail of the suspension or revocation. The notification shall set forth the 
details of the alleged violation which formed the basis for the action. The school (through its owner, 
partner, or corporate officer) or the instructor or the recruiter may request in writing a "show-cause" 
hearing. This request must be made within 30 days of receipt of the certified or registered letter. The 
hearing shall be heard by an officer designated by the commissioner and the school or instructor or 
recruiter may be represented by counsel. Upon completion of the hearing, the Division shall notify the 
school or instructor or recruiter within 30 days of the decision of the hearing officer. This decision 
may be appealed as provided by G.S. Chapter 150B. 

History Note; Statutory Authority G.S. 20-325; 
Eff. May 1, 1987; 
Amended Eff. October I, 1991. 

SECTION .0900 - REQUIREMENTS AND APPLICATIONS FOR DRD/ER TRAINLNG 

SCHOOL RECRUITERS 

.0901 REQUIREMENTS 

(a) A recruiter is one entitled to recruit or solicit candidates for truck driver training schools. Each 
recruiter shall: 

(1) Be of good moral character. 

(2) Not have been convicted of a felony or convicted of a misdemeanor involving moral turpitude 
in the ten years immediately preceding the date of application. 

(3) Have graduated from high school or hold a high school equivalency certificate. 

(b) A recruiter/trainee is one entitled to assist a licensed recruiter while his recruiter's license appli- 
cation is pending at the Division. The Division must be notified in writing within five days of the date 
the trainee is hired. A recruiter/trainee: 

( 1) may work in that capacity for only 30 days from the date he is hired; 

(2) must wear an identification badge which clearly identifies the individual as a recruiter/trainee. 

History Note: Statutory Authority G.S. 20-321; 
Eff. October 1, 1991. 

.0902 ORIGENAL APPLICATION 



6:12 NORTH CAROLINA REGISTER September 16, 1991 774 



FINAL RULES 



Each original application for a commercial truck driver training recruiter license shall consist of: 

(1) A combination application and personal history form which must be completed and signed by 
the applicant. 

(2) Satisfactory evidence of high school graduation or equivalency. 

(3) Consent form for background information. 

(4) Ten year criminal history check. 

(5) Certification by the institutional director that the applicant will be directed to act in accordance 
with the regulations as set forth by the Commissioner. 

(6) Verification that the applicant has read and understands the rules and regulations on advertising 
and solicitation, and his intent to follow rules as they are set forth. 

History Note: Statutory Authority G.S. 20-321; 
Eff. October I, 1991. 

.0903 RENEWAL APPLICATION 

Renewal application shall be made by a recruiter annually between May 1 and June 20 of each year. 
All licenses expire on June 30 of each year and no recruiter is permitted to operate with an expired li- 
cense. However, applications for renewal may be accepted for up to 30 days from the date of expira- 
tion. Any license expired for more than 30 days shall be deemed permanently lapsed and renewal of 
such license must be by the same process as required for an entirely new license, with all forms and 
certifications being required. 

History Note: Statutory Authority G.S. 20-321; 
Eff October 1, 1991. 

.0904 DUPLICATE COPIES 

All applications, either original or renewal, for a commercial truck driver training recruiter license shall 
be completed in duplicate. The original copy of each form shall be submitted to the Enforcement 
Section of the Division of Motor Vehicles. A copy of each form shall be filed at the place of business. 

History Note: Statutory Authority G.S. 20-321; 
Eff October 1, 1991. 

.0905 CONFIDENTIALITY 

All personal history schedules submitted pursuant to this Subchapter shall be confidential and privi- 
leged and the information contained therein shall be used by the Division only. 

History Note: Statutory Authority G.S. 20-321; 
Eff. October 1, 1991. 

.0906 SURRENDER OF LICENSES 

Any licensed commercial truck driver training recruiter who ceases to recruit candidates for training 
for the school for which he is licensed shall surrender his license within five days. The owner, partner, 
or chief corporate officer of the school shall be responsible for the return of the recruiter's license to the 
Division on termination of employment of any instructor. 

History Note: Statutory Authority G.S. 20-321; 
Eff October 1, 1991. 

.0907 LICENSE REQUIRED 

No person shall act as an instructor without the proper license as set forth in these Regulations. A 
recruiter must have a separate license for each school that they represent. All recruiters must verify by 
signature that they have read and that they understand the rules and regulations on advertising and 
solicitation and must verify their intent to follow rules as they are set forth. 

History Note: Statutory Authority G.S. 20-321; 
Eff. October 1, 1991. 



775 6:12 NORTH CAROLINA REGISTER September 16, 1991 



ARRC OBJECTIONS 



1 he Administrative Rules Review Commission (ARRC) objected to the following rules in accord- 
ance with G.S. I43B-30.2(c). State agencies are required to respond to ARRC as provided in G.S. 

143B-30.2(d). 

1 emporary Rules are noted by "*". These Rules have already gone into effect. 



ECONOMIC AND COMMUNITY DEVELOPMENT 



Employment and Training 

* 4 NCAC 20B .0903 - Allocation of Grants 

* 4 NCAC20B .0905 - Eligibility 

* 4 NCAC 20B .0907 - Cost Limitations, 1 Categories 

* 4 NCAC 20B .0908 - Reporting 

* 4 NCAC 20B .0909 - Performance Standards 

* 4 NCAC 20B .0911 - Fund Availability 



ARRC 
ARRC 
ARRC 
ARRC 
ARRC 
ARRC 



Objection 
Objection 
Objection 
Objection 
Objection 
Objection 



8122191 
8/22/9/ 
8/22/9/ 
8/22/91 
8/22/91 
8/22/91 



EDUCATION 

Elementary and Secondary Education 

16 NCAC 6C .0207 - Prospective Teacher Scholarship Loans 

Agency Revised Rule 
* 16 NCAC6E .0301 - Driver Training 

ENVIRONMENT, HEALTH, AND NATURAL RESOURCES 

Environmental Management 

ISA NCAC 2D .1102 - Applicability 

ISA NCAC 2D .1203 - Test Methods and Procedures 

Agency Revised Rule 

ISA NCAC 2D .1208 - Operator Training Requirements 

ISA NCAC 2D .1209 - Compliance Schedules 

Agency Revised Rule 

Adult Health 

ISA NCAC 16A .0804 - Financial Eligibility 

No Response from Agency 

Agency Responded 

No Response from Agency 
ISA NCAC 16 A .0806 - Billing the HIV Health Services Program 

No Response from Agency 

Agency Responded 

No Response from Agency 

Wildlife 

15A NCAC 10K .0001 - Course Requirements 
Agency Revised Rule 

HUMAN RESOURCES 



ARRC Objection 6/21/91 
Obj. Removed 7/18/91 
ARRC Objection 8/22/91 



ARRC Objection 
ARRC Objection 
Obj. Removed 
ARRC Objection 
ARRC Objection 
Obj. Removed 



ARRC Objection 

No Action 
No Action 
ARRC Objection 

No Action 
No Action 



8/22/91 
8/22/91 
8/22/91 
8/22/91 
8/22/91 
8/22/91 



1/18/91 
2/2S/91 
3/21/91 
4/18/91 
1/18/91 
2/2S/91 
3/21/91 
4/18/91 



ARRC Objection 7/18/91 
Obj. Removed 8/22/91 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



776 



ARRC OBJECTIONS 



Children's Services 

10 SCAC 411 .0406 - Responsibility for Training of Team Members 
Pending Correction 

Economic Opportunity 

* 10 SCAC 51 F .0/02 - Definitions 

* 10 XCAC 5 IF .0202 - Ineligible Activities 

* 10 NCAC51F .0402 - Eligibility Requirements 

* 10 NCAC 5 IF .0501 - Grant Agreement 

Facility Services 

10 XCAC 3U .0604 - General Safety Requirements 

10 XCAC 3U .0804 - Infectious and Contagious Diseases 

Individual and Family Support 

10 XCAC42B .1201 - Personnel Requirements 

Xo Response from Agency 

Agency Returned Rule Unchanged 

Agency Filed Rule with OA H 
10 XCAC42C .2001 - Qualifications of Administrator 

Xo Response from Agency 

Agency Returned Rule Unchanged 

Agency Filed Rule with OA H 
10 XCAC 42C .2002 - Qualifications of Supervisor-in-Charge 

Xo Response from Agency 

Agency Returned Rule Unchanged 

Agency Filed Rule with OAH 
10 XCAC 42C .2006 - Qualifications of Activities Coordinator 

Xo Response from Agency 

Agency Returned Rule Unchanged 

Agency Filed Rule with OAH 
10 XCA C 42C .3301 - Existing Building 

Agency Returned Rule U nchanged 

Agency Filed Rule with OAH 
10 XCAC 42D .1401 - Qualifications of Administrator' Co-Administrator 

Agency Returned Rule Unchanged 

Agency Filed Rule with OA H 

Medical Assistance 

10 XCAC 50B .0305 - Deprivation 
Agency Revised Rule 

Social Services 



ARRC Objection 7/18/91 
8122191 



ARRC Objection 8122191 

ARRC Objection 8/ 22/91 

ARRC Objection 8/22/91 

ARRC Objection 8', 22/91 



ARRC Objection 8/22,91 
ARRC Objection 8,22/91 



ARRC Objection 


1 IS 9/ 




2/25/91 


Xo A ction 


3/21/91 


Rule Eff. 


8/01/91 


ARRC Objection 


1118/91 




2/25/91 


Xo A ction 


3/21/91 


Rule Eff. 


8/01/91 


ARRC Objection 


1/18/91 




2/25/91 


Xo Action 


3/21 i 91 


Rule Eff. 


8.01 91 


ARRC Objection 


1/18/91 




2125,91 


Xo Action 


3/21/91 


Rule Eff. 


8,01,91 


ARRC Objection 


11/14/90 


Xo Action 


12' 20190 


Rule Eff. 


5,01,91 


ARRC Objection 


11/14190 


Xo A ction 


12/20190 


Rule Eff 


5/01/91 


ARRC Objection 


8,22 91 


Obj. Removed 


8, 22 91 



10 XCAC 24 A .0303 - Sel, County Board Members Social Svcs Comm 
Agency Revised Rule 

INSURANCE 

Engineering and Building Codes 

// XCAC 8 .0815 - Final Board Order 



ARRC Objection 4,18 91 
Obj. Removed 7/18,91 



ARRC Objection 7/18 91 



777 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



ARRC OBJECTIONS 



Agency Revised Rule 
LICENSING BOARDS AND COMMISSIONS 

Cosmetic Art Examiners 

21 NCAC 14F .00 JO - Sanitary Rules 

No Response from Agency 

Agency Requested Additional Time 

Agency Responded Will Repeal Rule 
21 NCAC 14G .0017 - Changes in Teaching Staff 

No Response from Agency 

21 NCAC 141 .0304 - Classroom Work 
No Response from Agency 
Agency Revised Rule 

Medical Examiners 

21 NCAC 32B .0309 - Personal Interview 
Agency Responded 
Rule Returned to Agency 

Practicing Psychologists 

21 NCAC 54 .1701 - Information Required 
21 NCAC 54 .1704 - Review Procedure 
Agency Revised Rule 
21 NCAC 54 .2103 - Reinstatement 

Real Estate Commission " 

21 NCAC58C .0302 - Program Structuring 

Agency Revised Rule 
21 NCAC 5SD .0201 - Qualifications for Appraiser Licensure and Cert. 

Agency Revised Rule 



Obj. Removed 8/22/91 



ARRC Objection 5/16/91 

No Action 7/18/91 
7/18/91 

Obj. Removed 8/22/91 

ARRC Objection 5/16/91 

No Action 7/18/91 

Obj. Removed 7/18/91 

ARRC Objection 5/16/91 

No Action 7/18/91 

Obj. Removed 7/18/91 



ARRC Objection 2/25/91 

No Action 3/21/91 

5/16/91 



ARRC Objection 8/22/91 

ARRC Objection 8/22/91 

Obj. Removed 8/22/91 

ARRC Objection 8/22/91 



ARRC Objection 7/18/91 

Obj. Removed 7/18/91 

ARRC Objection 7/18/91 

Obj. Removed 7/18/9/ 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



778 



RULES INVALID A TED BY JUDICIAL DECISION 



1 his Section of the Register lists the recent decisions issued by the North Carolina Supreme Court, 
Court of Appeals, Superior Court (when available), and the Office of Administrative Hearings which 
invalidate a rule in the North Carolina Administrath'e Code. 



10 NCAC 261 .0101 - PURPOSE: SCOPE/NOTICE OF CHANGE IN LEVEL OF CARE 

10 NCAC 261 .0102 - REQUESTS FOR RECONSIDERA TION AND RECIPIENT APPEALS 

10 NCAC 261 .0104 - FORMAL APPEALS 

Thomas R. West, Administrative Law Judge with the Office of Administrative Hearings, declared Rules 
10 NCAC 261 .0101, 10 NCAC 261 .0102 and 10 NCAC 261 .0104 void as applied in Linda Allred, 
Petitioner v. North Carolina Department of Human Resources, Division of Medical Assistance, Re- 
spondent (90 DHR 0940). 

10 NCAC 42W .0003(c) - COUNTY DEPT OF SOCIAL SERVICES RESPONSIBILITIES 
10 NCAC 42W .0005 - REPORTING CASES OF RAPE AND INCEST 

The North Carolina Court of Appeals, per Judge Robert F. Orr, declared Rules 10 NCAC 42W 
.0003(c) and 10 NCAC 42W .0005 void as applied In Rankin Whittington, Daniel C Hudgins, Dr. Takey 
Crist, Dr. Gwendolyn Boyd and Planned Parenthood of Greater Charlotte, Inc., Plaintiffs v. The North 
Carolina Department of Human Resources, Daxid Flaherty, in his capacity as Secretary of the North 
Carolina Department of Human Resources, The North Carolina Social Services Commission, and C 
Barry McCarty, in his capacity as Chairperson of the North Carolina Social Services Commission, De- 
fendants 1 100 N.C. App. 603, 398 S.E.2d 40 (1990)]. 

16 NCA C 6D .0105 - USE OF SCHOOL DA Y 

The North Carolina Supreme Court, per Associate Justice Henry E. Frye, held invalid Rule 16 NCAC 
6D .0105 as decided in The State of North Carolina; The North Carolina State Board of Education; and 
Bob Etheridge, State Superintendent of Public Instruction, Plaintiffs v. Whittle Communications and The 
Thomasville City Board of Education, Defendant-Counterclaimants and The Davidson County Board of 
Education, Defendant- 1 ntervenor and Counter claimant v. The State of North Carolina; The North 
Carolina State Board of Education; and Bob Etheridge, State Superintendent of Public Instruction; and 
Howard S. Haworth; Barbara M. Tapscott; Kenneth R. Harris; Teena Smith Little; W.C. Meekins Jr.; 
Mary B. Morgan; Patricia II. Need; Cary C. Owen; Donald D. Pollock; Prezell R. Robinson; Norma 
B. Turnage; State Treasurer Harlan E. Boyles; and Lt. Governor James C. Gardner; in their official 
capacities as members of The North Carolina State Board of Education, Counterclaim Defendants [328 
N.C. 456, 402 S.E.2d 556 (1991)). 

15 A NCAC 7H .0308 - SPECIFIC USE STANDARDS 

The North Carolina Court of Appeals, per Judge Sidney S. Eagles Jr., held that it was error for the 
Coastal Resources Commission to fail to follow the required notice and comment procedure prior to 
the adoption of temporary rule 15A NCAC 7H .0308(a)(l)(M), but that the CRC followed proper 
procedures when it adopted the text of the temporary rule as a permanent rule [15A NCAC 7H 
.0308(a)(l)(M)]. Conservation Council of North Carolina v. Haste (102 N.C. App. 411, 402 S.E.2d 447 
(1991)]. 



779 6:12 NORTH CAROLINA REGISTER September 16, 1991 



NOR TH CAROLINA ADMINISTRA TIVE CODE CLASSIFICA TION SYSTEM 



The North Carolina Administrative Code (NCAC) has four major subdivisions of rules. Two 
of these, titles and chapters, are mandatory. The major subdivision of the NCA C is the title. 
Each major department in the North Carolina executive branch of government has been as- 
signed a title number. Titles are further broken down into chapters which shall be numerical 
in order. The other two, subchapters and sections are optional subdivisions to be used by 
agencies when appropriate. 

TITLE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMCMSTRATEVE CODE 



ITLE 


DEPARTMENT 


1 


Administration 


2 


Agriculture 


3 


Auditor 


4 


Economic and Community 




Development 


5 


Correction 


6 


Council of State 


7 


Cultural Resources 


S 


Elections 


9 


Governor 


10 


Human Resources 


11 


Insurance 


12 


Justice 


13 


I^abor 


14A 


Crime Control and Public Safety 


15A 


Environment, Health, and Natural 




Resources 


16 


Public Education 


17 


Revenue 


18 


Secretary of State 


19A 


Transportation 


20 


Treasurer 


*2\ 


Occupational Licensing Boards 


22 


Administrative Procedures 


23 


Community Colleges 


24 


Independent Agencies 


25 


State Personnel 


26 


Administrative Hearings 



LICENSING BOARDS CHAPTER 


Architecture 


2 


Auctioneers 


4 


Barber Examiners 


6 


Certified Public Accountant Examiners 


X 


Chiropractic Examiners 


10 


General Contractors 


12 


Cosmetic Art Examiners 


14 


Dental Examiners 


16 


Electrical Contractors 


IS 


Foresters 


20 


Geologists 


21 


Hearing Aid Dealers and Fitters 


22 


Landscape Architects 


26 


Landscape Contractors 


28 


Marital & Family Therapy 


31 


Medical Examiners 


32 


Midwifery Joint Committee 


33 


Mortuary Science 


34 


Nursing 


36 


Nursing Home Administrators 


37 


Occupational Therapists 


38 


Opticians 


40 


Optometry 


42 


Osteopathic Examination and 


44 


Registration (Repealed) 




Pharmacy 


46 


Physical Therapy Examiners 


4S 


Plumbing, Heating and Fire Sprinkler 


50 


Contractors 




Podiatry Examiners 


52 


Practicing Counselors 


53 


Practicing Psychologists 


54 


Professional Engineers and Land Surveyor: 


i 56 


Real Estate Commission 


58 


Refrigeration Examiners 


60 


Sanitarian Examiners 


62 


Social Work 


63 


Speech and Language Pathologists and 


64 


Audiologists 




Veterinary Medical Board 


66 



Note: Title 21 contains the chapters of the various occupational licensing boards. 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



780 



CUMULA TIVE INDEX 



CUMULA TIVE INDEX 

(April 1991 - March 1992) 



1991 - 1992 



Pages 



Issue 



1 - 44 1 - April 

44 - 99 2 - April 

100 - 185 3 - May 

186 - 226 4 - May 

227 - 246 5 - June 

247 - 325 6 - June 

326 - 373 7 - July 

374 - 463 8 - July 

464 - 515 9 - August 

516 - 677 10 - August 

678 - 721 11 - September 

722 - 783 12 - September 



AO - Administrative Order 

AG - Attorney General's Opinions 

C - Correction 

FR - Final Rule 

GS - General Statute 

JO - Judicial Orders or Decision 

M - Miscellaneous 

NP - Notice of Petitions 

PR - Proposed Rule 

SO - Statements of Organization 

TR - Temporary Rule 



ADMINISTRATION 

State Construction, 465 PR 

ADMINISTRATIVE HEARLNGS 

Hearings Division, 310 FR 
Rules Division, 665 PR 

AGRICULTURE 

Food and Drug Protection Division, 576 PR, 725 PR 

Markets, 576 PR 

North Carolina State Fair, 576 PR 

Pesticide Board, 725 PR 

Plant Industry', 102 PR, 469 PR, 576 PR 

CORRECTION 

Division of Prisons, 35 FR, 87 FR, 209 FR, 700 FR 

CULTURAL RESOURCES 

State Library, 686 PR 



781 



6:12 NORTH CAROLINA REGISTER September 16, 1991 



CUMULA TIVE INDEX 



ECONOMIC AND COMMUNITY DEVELOPMENT 

Alcoholic Beverage Control Commission, 4 PR 
Community Assistance, 104 PR 
Credit Union Division, 231 PR, 683 PR 
Employment and Training, 590 PR 

ENVIRONMENT, HEALTH, AND NATURAL RESOURCES 

Coastal Management, 299 PR 

Environmental Management, 197 PR, 271 PR, 447 PR 

Forest Resources, 300 PR 

Health: Epidemiology, 28 PR, 341 PR, 735 PR 

Health Services, 9 PR, 327 PR, 727 PR 

Land Resources, 494 PR 

Marine Fisheries, 122 PR, 690 PR 

Parks and Recreation, 693 PR 

State Registrar, 734 PR 

Water Treatment Facility Operators, 495 PR 

Wildlife Resources Commission, 84 PR, 170 PR, 198 PR, 301 PR, 647 PR, 692 PR 

FINAL DECISION LETTERS 

Voting Rights Act, 48, 230, 248, 326, 464, 516, 681, 722 

FINAL RULES 

List of Rules Codified, 89 FR, 215 FR, 314 FR, 451 FR, 504 FR, 711 FR 

GOVERNOR/LT. GOVERNOR 

Executive Orders, 1, 45, 100, 186, 227, 247, 374, 678 

HUMAN RESOURCES 

Aging, Division of, 72 PR, 422 PR 

Blind, Services for, 686 PR 

Economic Opportunity, 604 PR, 689 PR 

Facility Services. 104 PR/471 PR, 592 PR 

Medical Assistance, 9 PR, 112 PR, 188 PR, 232 PR, 250 PR, 430 PR, 492 PR, 601 PR, 688 PR, 

726 PR 
Mental Health, Developmental Disabilities and Substance Abuse Services, 5 PR, 49 PR, 375 PR, 

449 FR 
Social Services, 116 PR 

INSURANCE 

Actuarial Services, 119 PR 

Life and Health Division, 430 PR 

Special Services Division, 84 PR 

JUSTICE 

Criminal Justice Education and Training Standards, 607 PR 
Private Protective Services, 121 PR 
Sheriffs' Standards Division, 618 PR 
State Bureau of Investigation, 250 PR 

LICENSING BOARDS 

Architecture, Board of, 30 PR, 232 PR 

Certified Public Accountant Examiners, 201 PR 

Cosmetic Art Examiners, 653 PR 

Electrolysis Examiners, Board of, 737 PR 

Geologists, Board of, 654 PR 

Hearing Aid Dealers and Fitters, 496 PR, 655 PR 

Landscape Contractors' Registration Board, 665 PR 



6:12 NORTH CAROLINA REGISTER September 16, 1991 782 



CUMULA TIVE INDEX 



Medical Examiners, Board of, 304 PR, 363 PR 

Nursing, Board of, 305 PR 

Pharmacy, Board of, 201 PR 

Physical Therapy Examiners, Board of, 33 PR, 363 PR 

Practicing Psychologists Examiners, 203 PR 

Professional Engineers and Land Surveyors, 497 PR 

Real Estate Commission, 171 PR, 500 PR 

PUBLIC EDUCATION 

Elementary and Secondary, 29 PR, 199 PR, 303 PR, 694 PR 

REVENUE 

Individual Income, Inheritance and Gift Tax Division, 739 FR 
Individual Income Tax Division, 234 FR, 747 FR 
Intangibles Tax Division, 766 FR 
License and Excise Tax Division, 740 FR 
Motor Fuels Tax Division, 768 FR 
Property Tax Commission, 210 FR 

SECRETARY OF STATE 

Securities Division, 85 PR 

STATE PERSONNEL 

Office of State Personnel, 696 PR 

State Personnel Commission, 172 PR, 364 PR 

STATE TREASURER 

Retirement Systems, 736 PR 

STATEMENTS OF ORGANIZATION 

Statements of Organization, 518 SO 

TRANSPORTATION 

Division of Motor Vehicles, 213 FR, 502 FR, 701 FR, 773 FR 



783 6:12 NORTH CAROLINA REGISTER September 16, 1991 



NORTH CAROLINA ADMINISTRATIVE CODE 

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